Local expenditures in neighbouring municipalities can be spatially interdependent due to spillovers, cooperation effects, competition effects or mimicking. In this paper, we aim to test the spatial interdependence of local public expenditures using data on 205 Czech municipalities. We found...

The interregional mobility of high skilled workers might induce an underinvestment in local public higher education when sub-federal entities independently decide on education expenditures to maximize local output. This well-known result is due to interregional spillovers and provides a...

In this contribution we are exploring to which extent municipalities depend on transfers and financing through debt. Answering this question allows us to draw conclusions about the capacity of municipalities to adapt their fiscal policy in response to unexpected fiscal shocks to municipal...

This paper studies comprehensive national panel data of local option sales taxes at the monthly frequency. I calculate state-by-month population weighted averages and standard deviations of local sales tax rates. I document ten stylized facts concerning the time series patterns and spatial...

This paper looks at the intergovernmental mechanisms by which federalism operates in Australia, notably the Council of Australian Governments (COAG), Commonwealth Grants Commission (CGC), Australian Loan Council (ALC). These three main systems contribute to improve Australian intergovernmental...

Standard models of soft budget constraints consider bailouts as pure monetary transfers. However, in practice often additional obligations or restrictions, such as savings goals, are linked to monetary bailouts. This paper analyzes in a model of a federation if such restrictions change economic...

The fiscal and financial reforms carried out in Mexico in 2000 have encouraged a widespread presence of rating agencies and have allowed several States and unicipalities to raise funds through bond offerings in the capital market. Any local government in Mexico intending to access credit and...

This paper analyses and compares the efficiency of alternative incentive compatible grant schemes under asymmetric information relieving subnational governments of excessive debt burden. They allow intervention into local debt, local tax or complete local fiscal policy. In the first case,...

Formal fiscal rules have been introduced in many countries throughout the world. While most studies focus on the intra-jurisdictional effects of fiscal rules, vertical effects on the finances of other levels of government have yet to be explored thoroughly. This paper investigates the influence...