Testing regional intergovernmental transfers asymmetries in Uruguay

Muinelo-Gallo, Leonel and Azar, Paola (2018): Testing regional intergovernmental transfers asymmetries in Uruguay.

Abstract

In this paper we seek to complement the scarce empirical evidence for middle-income countries about the effects of unconditional central government transfers on subnational fiscal behaviour. To this end, we have used an unbalanced panel of 18 Uruguayan regional governments from 1991 to 2016. Our database includes data from the regional budget and other sources of information, which allows us to investigate the role of political economy factors. The application of panel data techniques with the use of instrumental variables highlights the presence of a sizeable flypaper effect and a significant role of variables related with the political economy design of sub-national finances.

• Item Type: MPRA Paper
• Language: English
• Keywords: Fiscal federalism, Intergovernmental transfers, Flypaper effect, Endogeneity, Uruguay
• Subjects: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy; H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations

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