Darby, J., Muscatelli, V. A. and Roy, G. (2005) Fiscal consolidation and decentralisation: a tale of two tiers. Fiscal Studies, 26(2), pp. 169-195. (doi: 10.1111/j.1475-5890.2005.00009.x)
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Abstract
This paper contributes to the established literature on fiscal consolidations by investigating the distinct behaviour of central and sub-central tiers of government during general government consolidation attempts. In the light of different degrees of decentralisation across OECD countries, and the different responsibilities devolved to sub-central tiers, we believe that this approach offers an illuminating insight into the analysis of fiscal consolidations and their success. We show that the involvement of the sub-central tiers of government is crucial to achieving cuts in expenditure, particularly in relation to the overall size of the government wage bill. In addition, central governments appear to exert a strong influence on the expenditure of sub-central tiers through their grant allocations, and control of these allocations appears to have a considerable impact upon the overall success of consolidation attempts. Finally, we demonstrate that there is a skewness in cuts towards sub-central capital expenditure both when central governments cut grant allocations and when sub-central governments engage in lone consolidation attempts.
| Item Type: | Articles |
|---|---|
| Status: | Published |
| Refereed: | Yes |
| Glasgow Author(s) Enlighten ID: | Roy, Professor Graeme and Muscatelli, Professor Anton |
| Authors: | Darby, J., Muscatelli, V. A., and Roy, G. |
| College/School: | College of Social Sciences > Adam Smith Business School > Economics |
| Journal Name: | Fiscal Studies |
| Publisher: | Blackwell Publishing |
| ISSN: | 0143-5671 |
| ISSN (Online): | 1475-5890 |
| Published Online: | 20 June 2005 |
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