Munich Personal RePEc Archive

Institutional design and implicit incentives in Bolivia's decentralization model

Barja, Gover and Villarroel, Sergio and Zavaleta, David (2013): Institutional design and implicit incentives in Bolivia's decentralization model. Published in: Latin American Journal of Economic Development No. 19 (May 2013): pp. 137-211.

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Abstract

The second generation fiscal federalism approach is used as a reference to analyze the political and fiscal institutional design of Bolivia’s decentralization model and its evolution. Sub-national public finance data up to 2008 is used to verify that decentralization of expenditure was higher than that of revenue, establishing a context of vertical fiscal imbalance that increased due to growing fiscal transfers during the positive external shock (boom) period. Panel models were estimated at sub-national levels to identify and assess the implicit incentives embedded in fiscal institutions of the decentralization model.

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