Intergovernmental grants, pro- or counter-cyclical? / Hansjörg Blöchliger; Balázs Égert

By: Contributor(s): Resource type: Ressourcentyp: Buch (Online)Book (Online)Language: English Series: OECD. OECD Economics Department working papers ; 1072 | Fiscal consolidation across government levels ; 3Publisher: Paris : OECD, 2013Description: Online-Ressource (15 S.)Subject(s): Genre/Form: DOI: DOI: 10.1787/5k43nxqrlmtf-enOnline resources: Summary: This paper provides empirical analysis that measures the cyclical properties of intergovernmental transfers (or grants). Modelling a fiscal policy reaction function this paper tests whether the transfers systems in OECD countries are pro- or counter-cyclical, i.e. whether they offset cyclical fluctuations of sub-central economies or, on the contrary, exacerbate them. Regression results suggest that transfer systems tend to be pro-cyclical in general and in more than half of OECD countries they tend to destabilise sub-central budgets. Transfer pro-cyclicality may be the result of several factors: Transfer spending is often determined as a share of central government tax revenue, which itself tends to fluctuate with the cycle. Moreover, many grants are matching sub-central spending and hence tend to exacerbate fluctuations of that sub-central spending. Pro-cyclical grants could partly explain the often observed pro-cyclicality of subcentral government fiscal policy.PPN: PPN: 755691091Package identifier: Produktsigel: ZDB-13-SOC | ZDB-13-SOC-ebook
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