Fiscal decentralization and fiscal consolidations in emerging market economies

Abstract

Results using event study analysis based on a data panel of expenditure and revenue developments in emerging market economies during 1972–2001 indicate that subnational governments supported fiscal consolidation efforts by cutting their capital expenditure and increasing their revenues.

Notes

¹The countries and respective sample periods are: Argentina 1982–2001; Bolivia 1986–2001; Bulgaria 1988–2001; Chile 1975–2001; Hungary 1981–2001; Iceland 1987–1998; Israel 1976–1992; Malaysia 1982–1997; Mexico 1972–1987 and South Africa 1977–1994.

²In practice, the GFS data overstate the true degree of fiscal decentralization because no distinction is made between revenues and expenditures that involve little real autonomy on the part of sub-national governments.

³The chronology of adjustment episodes is available from the authors on request.