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Fiscal Consolidation Across Government Levels - Part 3. Intergovernmental Grants, Pro- or Counter-cyclical?

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 fluctu...

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Bibliographic Details
Main Author: Blöchliger, Hansjörg.
Corporate Author: OECD iLibrary.
Other Authors: Égert, Balázs.
Format: Online
Language:English
Published: Paris : OECD Publishing, 2013.
Series:OECD working papers. Economic Department working papers ; no. 1072.
Online Access:Online version
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024 7 |a 10.1787/5k43nxqrlmtf-en  |2 doi 
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100 1 |a Blöchliger, Hansjörg. 
245 1 0 |a Fiscal Consolidation Across Government Levels - Part 3. Intergovernmental Grants, Pro- or Counter-cyclical?  |h [electronic resource] /  |c Hansjörg Blöchliger and Balázs Égert 
260 |a Paris :  |b OECD Publishing,  |c 2013. 
300 |a 16 p. ;  |c 21 x 29.7 cm. 
490 1 |a OECD Economics Department Working Papers,  |x 1815-1973 ;  |v no.1072 
506 |a Electronic access restricted to Villanova University patrons. 
520 3 |a 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. 
650 4 |a Economics 
650 4 |a Taxation 
700 1 |a Égert, Balázs. 
710 2 |a OECD iLibrary. 
830 0 |a OECD working papers.  |p Economic Department working papers ;  |v no. 1072. 
856 4 0 |z Online version  |u http://ezproxy.villanova.edu/login?URL=http://dx.doi.org/10.1787/5k43nxqrlmtf-en 
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