contextualized by lessons from the country's past decentralization experience under the Local Government Code of 1991. The paper also …

-transfers, which distorts the central-local distribution of resources. Applying the model to fiscal decentralization, we find when … decentralization widens local governments' fiscal gap, borrowings by both local and central governments rise. Quantitatively, fiscal … decentralization accounts for from 19 percent to 40 percent of changes in general government debt in Spain during 1988-2006. A …