This paper develops a dynamic infinite-horizon model with two layers of governments to study theoretically and quantitatively how fiscal decentralization affects local and central government debt accumulation and spending. In the model, the central government makes transfers to local governments to offset vertical and horizontal fiscal imbalances. But the anticipation of transfers lowers local governments’ expected cost of borrowing and leads to overborrowing...
Vea más
INFORMACIÓN
-
2022/02/07
-
Documento de trabajo sobre investigaciones relativas a políticas
-
WPS9927
-
1
-
1
-
2022/02/07
-
Disclosed
-
A Dynamic Model of Fiscal Decentralization and Public Debt Accumulation
-
vertical fiscal imbalance