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Does fiscal decentralization affect the effectiveness of intergovernmental grants? European regional policy and S panish autonomous regions
Author(s) -
GonzálezAlegre Juan
Publication year - 2015
Publication title -
papers in regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.937
H-Index - 64
eISSN - 1435-5957
pISSN - 1056-8190
DOI - 10.1111/pirs.12098
Subject(s) - decentralization , fiscal federalism , subsidy , autonomy , redistribution (election) , economics , panel data , investment (military) , public economics , economic policy , political science , law , market economy , econometrics , politics
We suspect that the efficiency of intergovernmental grants is related to the level of fiscal autonomy of the subsidized government. In this paper we construct and estimate a panel data model capturing the role of fiscal federalism on the effectiveness of EU structural actions in enhancing public investment. We use data from the 17 S panish regions for the period 1993–2007. Results unambiguously support the hypothesis that the effectiveness of the structural funds decreases with larger fiscal autonomy, which could reflect the fact that fiscal decentralization in S pain has been focused to larger taxation autonomy without affecting regional income redistribution.