Effects of subnational heterogeneity on fiscal discipline : a legislative game
Date
2016-09-07
Authors
Habermacher, Daniel
relationships.isContributorOfPublication
Tommasi, Mariano
Journal Title
Journal ISSN
Volume Title
Publisher
Universidad de San Andrés. Departamento de Economía
Abstract
This article studies how differences in subnational financial strength influence legislative resolutions
regarding fiscal matters in federal countries. Legislative coalitions give birth to institutions
that shape subnational fiscal incentives. The approach works for particular early periods in federals
countries’ history, which we define as “constitutional moments”.
Downsian-elected representatives from each region form the Senate, which must decide over
a federal grant system. The grant bill will be passed depending on the regional distribution of
its costs, given that there is a majority requirement. Some extensions regarding the inter-regional
distribution of population, state-specific grants, and the incentives for blocking coalitions are analyzed.
Finally, we explore the model’s empirical relevance with a brief survey on the early fiscal
federalism in the U.S, Argentina, and Germany.
Description
Fil: Habermacher, Daniel. Universidad de San Andrés. Departamento de Economía; Argentina.
Keywords
Intergovernmental fiscal relations -- Political aspects -- Mathematical models. , Fiscal policy -- Mathematical models. , Finance, Public -- Mathematical models. , Legislative bodies -- Voting -- Mathematical models. , Relaciones fiscales intergubernamentales -- Aspectos políticos -- Modelos matemáticos. , Política fiscal -- Modelos matemáticos. , Finanzas públicas -- Modelos matemáticos. , Cuerpos legislativos -- Voto -- Modelos matemáticos.