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Fiscal Federalism Amid Institutional Weakness: The Argentine Fiscal Pacts of the 1990s
Author(s) -
Sanchez Omar
Publication year - 2011
Publication title -
latin american policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.195
H-Index - 4
eISSN - 2041-7373
pISSN - 2041-7365
DOI - 10.1111/j.2041-7373.2011.00035.x
Subject(s) - fiscal federalism , fiscal union , economics , incentive , politics , fiscal policy , fiscal imbalance , obstacle , stability and growth pact , macroeconomics , economic policy , political science , market economy , decentralization , european union , member states , law
This article provides a political‐economic evaluation of the Argentine federal fiscal system during the 1990s. It describes and analyzes the innovations made to the rules governing the intergovernmental fiscal game, with a focus on the important fiscal landmarks of that decade, namely the fiscal pacts of 1992, 1993, 1999, and 2000. The record shows that many of the reforms to the fiscal regime have involved extensive political horse‐trading and have been inefficient from an economic standpoint and that the level of players' compliance with fiscal pact clauses has been low. The main obstacle to crafting a more economically rational federal fiscal system rests on the overall institutional framework within which political exchanges take place. This weak institutional setting provides powerful incentives for players to focus on the short term and aggravates collective action problems by fostering a static and narrow conception of self‐interest, divorced from the overall (dynamic) coherence of the fiscal regime.