2011年-IMF国际货币组织全球_Decentralizing_Spending_More_Than_Revenue_Does_it_Hurt_Fiscal_Performance__34页_628kb

Summary of "Decentralizing Spending More than Revenue: Does It Hurt Fiscal Performance?"

Core Content

This IMF Working Paper by Luc Eyraud and Lusine Lusinyan analyzes the impact of vertical fiscal imbalances (VFIs) on fiscal performance in OECD countries. It explores whether decentralizing spending responsibilities more than revenue powers leads to worse fiscal outcomes.

Main Viewpoints

• Decentralization Trends: Many OECD countries have decentralized spending more than revenue, leading to a reliance on transfers and borrowing to fund sub-national expenditures.
• Vertical Fiscal Imbalance (VFI): Defined as the share of sub-national own spending not financed through own revenues. It includes both transfer dependency and sub-national borrowing.
• Fiscal Discipline and Performance: Large VFIs may weaken fiscal discipline, as sub-national governments may not internalize the full cost of their spending and may over-spend or under-tax.
• Empirical Evidence: The paper finds that higher VFI is associated with lower fiscal performance at the general government level. However, in some cases, VFI may reflect central government control over sub-national finances, leading to better fiscal outcomes.

Key Findings

• Negative Impact of VFI: The paper presents evidence that an increase in VFI is correlated with a decline in fiscal performance. This is particularly true in countries with large regional disparities.
• Borrowing's Role: Sub-national borrowing contributes significantly to changes in VFI, although it is less common than transfers.
• No Clear Causality: There is no strong evidence that revenue decentralization follows expenditure decentralization in the short run. The relationship is complex and varies across countries.
• Policy Implications: Fiscal discipline can be improved by ensuring that sub-national governments have adequate taxing powers to meet their spending obligations. This suggests that revenue decentralization should be aligned with expenditure decentralization.

Key Information

Definitions and Concepts

• Vertical Fiscal Imbalance (VFI): The gap between sub-national own spending and own revenues, often filled by transfers and borrowing.
• Horizontal Fiscal Imbalance (HFI): Differences in fiscal capacity across sub-national entities, not levels of government.
• Flypaper Effect: A theory suggesting that transfers increase local spending, which may be relevant to understanding VFI dynamics.

Econometric Approach

• The paper uses a cross-country analysis, distinguishing from case studies.
• It incorporates a measure of VFI that includes both transfers and borrowing.
• The analysis accounts for endogeneity issues in the relationship between VFI and fiscal performance.

Data and Methodology

• Data Sources: OECD General Government Accounts database (1995–2007).
• Variables: VFI, revenue decentralization, expenditure decentralization, general government deficit.
• Methods: Granger causality tests, regression analysis, and decomposition of VFI changes.

Stylized Facts

1. Variation in VFI: VFI varies widely across countries, with an average of about 40% in the sample. Some countries (e.g., Iceland) have low VFI, while others (e.g., Mexico) have high VFI.
2. Borrowing's Contribution: Sub-national borrowing, although low on average, is highly volatile and contributes significantly to changes in VFI.
3. Decline in VFI Over Time: VFI has generally decreased over the period 1995–2007, partly due to improvements in the general government balance.
4. No Causality Rule: There is no consistent evidence that revenue decentralization follows expenditure decentralization, suggesting a more complex relationship.
5. Fiscal Performance and VFI: Higher VFI is associated with lower fiscal performance at the general government level, especially in countries with large regional disparities.

Policy Implications

• Revenue Decentralization: It is crucial to ensure that sub-national governments have sufficient revenue powers to meet their spending responsibilities.
• Transfer Dependency: While transfers may be necessary, they can reduce the fiscal discipline of sub-national governments.
• Borrowing Risks: Soft financing through borrowing may lead to higher deficits and less accountability.
• Balancing Decentralization: A balanced approach to fiscal decentralization, where spending and revenue powers are aligned, is likely to improve fiscal outcomes.

Conclusion

The paper concludes that reducing vertical fiscal imbalances can lead to better fiscal performance, particularly in countries with significant regional disparities. However, it also highlights that some degree of VFI may be necessary or even beneficial, depending on the context. The findings suggest that policymakers should consider the trade-offs between spending and revenue decentralization to enhance fiscal discipline and performance.