Subnational Fiscal Policy in Large Developing Countries: Some Lessons from the 2008-09 Crisis for Brazil, China and India
In response to the Great Recession of 2008, many national governments implemented fiscal stimuli packages in 2009 and 2010 to prevent further declines in aggregate demand and to jump start their economic recovery. Where subnational governments resp...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, D.C.
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2013/04/17580907/subnational-fiscal-policy-large-developing-countries-some-lessons-2008-09-crisis-brazil-china-india http://hdl.handle.net/10986/14447 |
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okr-10986-14447 |
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oai_dc |
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Digital Repository |
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Foreign Institution |
| institution |
Digital Repositories |
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World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCOUNTING AGGREGATE DEBT AGGREGATE EXPENDITURE AUTONOMY AVAILABILITY OF CREDIT BAILOUT BANK CREDIT BANK FAILURES BANK FINANCING BANK LOANS BANK POLICY BANKING SYSTEM BENEFICIARY BINDING CONSTRAINT BUDGET DEFICIT CAPITAL EXPENDITURE CAPITAL FLOWS CAPITAL INFLOWS CAPITAL INVESTMENT CAPITAL PROJECTS CENTRAL GOVERNMENT CENTRAL GOVERNMENTS CENTRAL REVENUES CENTRAL SPENDING CENTRAL TRANSFERS CIVIL SERVICE COLLATERAL COMMERCIAL BANKS COMPARATIVE ANALYSIS CONSTITUTIONAL MANDATE CONSUMER DURABLES CONTINGENT LIABILITIES CORPORATE INVESTMENT CREDIT FLOWS CREDIT MARKET CREDIT MARKETS CREDITORS CURRENT EXPENDITURES DEBT CRISIS DEBT FLOWS DEBT LEVELS DEBT RELIEF DEBT SERVICE DECENTRALIZATION DEFAULT RATES DEVELOPING COUNTRIES DEVELOPMENT BANK DEVOLUTION DOMESTIC BANK DOMESTIC BANKING DOMESTIC BANKS DOMESTIC BORROWING ECONOMIC CONDITIONS ECONOMIC TRANSACTIONS EMERGING ECONOMIES EMERGING MARKETS EMPLOYMENT ENTERTAINMENT TAXES EQUALIZATION EXPENDITURE EXPENDITURE CONTRACTION EXPENDITURE CUTS EXPENDITURE NEEDS EXPENDITURES EXTERNAL BORROWING FEDERAL COUNTRIES FEDERAL COUNTRY FEDERAL GRANTS FEDERALISM FINANCIAL CRISIS FINANCIAL DISTRESS FINANCIAL INSTITUTIONS FINANCIAL MANAGEMENT FINANCIAL SYSTEM FISCAL ADJUSTMENT FISCAL BALANCE FISCAL BALANCES FISCAL BURDEN FISCAL DECENTRALIZATION FISCAL DEFICIT FISCAL DEFICITS FISCAL FEDERALISM FISCAL FRAMEWORK FISCAL IMPACT FISCAL POLICIES FISCAL POLICY FISCAL SPACE FOREIGN DIRECT INVESTMENT GLOBAL ECONOMY GLOBAL MARKET GOVERNMENT BANKRUPTCY GOVERNMENT DEBT GOVERNMENT DEFICITS GOVERNMENT EXPENDITURE GOVERNMENT EXPENDITURES GOVERNMENT POLICY GOVERNMENT REVENUE GOVERNMENT REVENUES GOVERNMENT SPENDING GROSS DOMESTIC PRODUCT HOUSING HOUSING PRICES HUMAN CAPITAL INCOME LEVEL INDEBTED COUNTRIES INDEBTEDNESS INFLATION INFRASTRUCTURE INVESTMENT INFRASTRUCTURE INVESTMENTS INSTRUMENT INTEREST BURDEN INTEREST RATES INTERGOVERNMENTAL TRANSFERS INTERNATIONAL BANK INTERNATIONAL CREDIT INVESTMENT CLIMATE INVESTMENT DECISIONS INVESTMENT FLOWS INVESTMENT PROJECTS LAWS LEGAL PROHIBITION LEGISLATION LEVEL OF DEBT LEVY LIMITED BORROWING CAPACITY LOAN LOAN CATEGORIES LOCAL GOVERNMENT MACROECONOMIC EFFECTS MACROECONOMIC IMPACT MARKET DISCIPLINE MEDIUM-TERM FISCAL MINISTRY OF FINANCE MONETARY FUND MONETARY POLICIES MONETARY POLICY MORAL HAZARD MUNICIPAL GOVERNMENTS MUNICIPALITIES MUNICIPALITY NATIONAL TREASURY NET CURRENT REVENUE OUTSTANDING DEBT PERSONAL INCOME POLICY DECISION POLICY MAKERS POLICY RESPONSE POLICY RESPONSES PORTFOLIO PORTFOLIO INVESTMENT PRICE MOVEMENTS PRIVATE CAPITAL PRIVATE CAPITAL INFLOWS PRIVATE CREDIT PRIVATE INVESTMENT PROVINCES PROVINCIAL GOVERNMENTS PUBLIC CONSUMPTION PUBLIC DEBT PUBLIC EMPLOYEES PUBLIC ENTERPRISES PUBLIC FINANCE PUBLIC FINANCE STATISTICS PUBLIC FINANCES PUBLIC INVESTMENT PUBLIC INVESTMENTS PUBLIC SPENDING PURCHASING POWER REAL INTEREST REAL INTEREST RATES RECURRENT EXPENDITURE REGISTRATION FEES RESERVE RESERVE BANK RESERVE BANK OF INDIA REVENUE BASE REVENUE COLLECTIONS REVENUE GROWTH REVENUE RATIO REVENUE SHARING REVENUE SHORTFALL SAFETY NET SAVINGS STAMP DUTY STATE EXPENDITURES STATE GOVERNMENT STATE GOVERNMENTS SUB-NATIONAL SUB-NATIONAL FINANCES SUB-NATIONAL GOVERNMENTS SUBNATIONAL SUBNATIONAL DEBT SUBNATIONAL DEFICITS SUBNATIONAL ENTITIES SUBNATIONAL EXPENDITURES SUBNATIONAL FINANCE SUBNATIONAL FINANCES SUBNATIONAL GOVERNMENT SUBNATIONAL GOVERNMENT EXPENDITURES SUBNATIONAL GOVERNMENT FINANCE SUBNATIONAL GOVERNMENT FINANCES SUBNATIONAL GOVERNMENTS SUBNATIONAL UNITS TAX TAX BENEFITS TAX COLLECTIONS TAX REVENUE TAX REVENUES TAX SHARING TOTAL EXPENDITURE TOTAL EXPENDITURES TRANSPORT |
| spellingShingle |
ACCOUNTING AGGREGATE DEBT AGGREGATE EXPENDITURE AUTONOMY AVAILABILITY OF CREDIT BAILOUT BANK CREDIT BANK FAILURES BANK FINANCING BANK LOANS BANK POLICY BANKING SYSTEM BENEFICIARY BINDING CONSTRAINT BUDGET DEFICIT CAPITAL EXPENDITURE CAPITAL FLOWS CAPITAL INFLOWS CAPITAL INVESTMENT CAPITAL PROJECTS CENTRAL GOVERNMENT CENTRAL GOVERNMENTS CENTRAL REVENUES CENTRAL SPENDING CENTRAL TRANSFERS CIVIL SERVICE COLLATERAL COMMERCIAL BANKS COMPARATIVE ANALYSIS CONSTITUTIONAL MANDATE CONSUMER DURABLES CONTINGENT LIABILITIES CORPORATE INVESTMENT CREDIT FLOWS CREDIT MARKET CREDIT MARKETS CREDITORS CURRENT EXPENDITURES DEBT CRISIS DEBT FLOWS DEBT LEVELS DEBT RELIEF DEBT SERVICE DECENTRALIZATION DEFAULT RATES DEVELOPING COUNTRIES DEVELOPMENT BANK DEVOLUTION DOMESTIC BANK DOMESTIC BANKING DOMESTIC BANKS DOMESTIC BORROWING ECONOMIC CONDITIONS ECONOMIC TRANSACTIONS EMERGING ECONOMIES EMERGING MARKETS EMPLOYMENT ENTERTAINMENT TAXES EQUALIZATION EXPENDITURE EXPENDITURE CONTRACTION EXPENDITURE CUTS EXPENDITURE NEEDS EXPENDITURES EXTERNAL BORROWING FEDERAL COUNTRIES FEDERAL COUNTRY FEDERAL GRANTS FEDERALISM FINANCIAL CRISIS FINANCIAL DISTRESS FINANCIAL INSTITUTIONS FINANCIAL MANAGEMENT FINANCIAL SYSTEM FISCAL ADJUSTMENT FISCAL BALANCE FISCAL BALANCES FISCAL BURDEN FISCAL DECENTRALIZATION FISCAL DEFICIT FISCAL DEFICITS FISCAL FEDERALISM FISCAL FRAMEWORK FISCAL IMPACT FISCAL POLICIES FISCAL POLICY FISCAL SPACE FOREIGN DIRECT INVESTMENT GLOBAL ECONOMY GLOBAL MARKET GOVERNMENT BANKRUPTCY GOVERNMENT DEBT GOVERNMENT DEFICITS GOVERNMENT EXPENDITURE GOVERNMENT EXPENDITURES GOVERNMENT POLICY GOVERNMENT REVENUE GOVERNMENT REVENUES GOVERNMENT SPENDING GROSS DOMESTIC PRODUCT HOUSING HOUSING PRICES HUMAN CAPITAL INCOME LEVEL INDEBTED COUNTRIES INDEBTEDNESS INFLATION INFRASTRUCTURE INVESTMENT INFRASTRUCTURE INVESTMENTS INSTRUMENT INTEREST BURDEN INTEREST RATES INTERGOVERNMENTAL TRANSFERS INTERNATIONAL BANK INTERNATIONAL CREDIT INVESTMENT CLIMATE INVESTMENT DECISIONS INVESTMENT FLOWS INVESTMENT PROJECTS LAWS LEGAL PROHIBITION LEGISLATION LEVEL OF DEBT LEVY LIMITED BORROWING CAPACITY LOAN LOAN CATEGORIES LOCAL GOVERNMENT MACROECONOMIC EFFECTS MACROECONOMIC IMPACT MARKET DISCIPLINE MEDIUM-TERM FISCAL MINISTRY OF FINANCE MONETARY FUND MONETARY POLICIES MONETARY POLICY MORAL HAZARD MUNICIPAL GOVERNMENTS MUNICIPALITIES MUNICIPALITY NATIONAL TREASURY NET CURRENT REVENUE OUTSTANDING DEBT PERSONAL INCOME POLICY DECISION POLICY MAKERS POLICY RESPONSE POLICY RESPONSES PORTFOLIO PORTFOLIO INVESTMENT PRICE MOVEMENTS PRIVATE CAPITAL PRIVATE CAPITAL INFLOWS PRIVATE CREDIT PRIVATE INVESTMENT PROVINCES PROVINCIAL GOVERNMENTS PUBLIC CONSUMPTION PUBLIC DEBT PUBLIC EMPLOYEES PUBLIC ENTERPRISES PUBLIC FINANCE PUBLIC FINANCE STATISTICS PUBLIC FINANCES PUBLIC INVESTMENT PUBLIC INVESTMENTS PUBLIC SPENDING PURCHASING POWER REAL INTEREST REAL INTEREST RATES RECURRENT EXPENDITURE REGISTRATION FEES RESERVE RESERVE BANK RESERVE BANK OF INDIA REVENUE BASE REVENUE COLLECTIONS REVENUE GROWTH REVENUE RATIO REVENUE SHARING REVENUE SHORTFALL SAFETY NET SAVINGS STAMP DUTY STATE EXPENDITURES STATE GOVERNMENT STATE GOVERNMENTS SUB-NATIONAL SUB-NATIONAL FINANCES SUB-NATIONAL GOVERNMENTS SUBNATIONAL SUBNATIONAL DEBT SUBNATIONAL DEFICITS SUBNATIONAL ENTITIES SUBNATIONAL EXPENDITURES SUBNATIONAL FINANCE SUBNATIONAL FINANCES SUBNATIONAL GOVERNMENT SUBNATIONAL GOVERNMENT EXPENDITURES SUBNATIONAL GOVERNMENT FINANCE SUBNATIONAL GOVERNMENT FINANCES SUBNATIONAL GOVERNMENTS SUBNATIONAL UNITS TAX TAX BENEFITS TAX COLLECTIONS TAX REVENUE TAX REVENUES TAX SHARING TOTAL EXPENDITURE TOTAL EXPENDITURES TRANSPORT Fardoust, Shahrokh Ravishankar, V.J. Subnational Fiscal Policy in Large Developing Countries: Some Lessons from the 2008-09 Crisis for Brazil, China and India |
| geographic_facet |
East Asia and Pacific Latin America & Caribbean South Asia Brazil China India |
| relation |
Policy Research Working Paper;No.6409 |
| description |
In response to the Great Recession of
2008, many national governments implemented fiscal stimuli
packages in 2009 and 2010 to prevent further declines in
aggregate demand and to jump start their economic recovery.
Where subnational governments responded with fiscal
contraction, as in the United States, the impact was muted;
where states/provinces also expanded expenditures, as in
China and India, the impact was magnified. Increases in
recurrent expenditure, which were made in Brazil and India,
acted as short-term stimulants; additional public
investment, as in China, appears to have had a more lasting
impact on growth. Large developing countries typically
exhibit high interregional inequality in levels of
development and global integration, resulting in
differential magnitude and timing of the crisis impact. For
example, coastal states in India were affected more severely
and quickly than landlocked states; revenue moved in
opposite directions in the two types of state in 2009. Where
fiscal stress varies widely across subnational entities,
central transfers alone cannot prevent pro-cyclicality of
subnational fiscal response to a recession. There is need
for flexibility in subnational borrowing within a
sustainable fiscal framework. Many Indian states were able
to maintain or accelerate their spending thanks to the
additional borrowing permitted in 2009 and 2010. In
comparison, limited borrowing capacity and lack of
flexibility in federal grants restricted the contribution of
Brazilian states to fiscal stimulus. Legal prohibition of
subnational borrowing induced China's provinces to
finance additional investments through extra-budgetary
borrowing by nongovernment entities, with significant fiscal
risks on account of contingent liabilities. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Fardoust, Shahrokh Ravishankar, V.J. |
| author_facet |
Fardoust, Shahrokh Ravishankar, V.J. |
| author_sort |
Fardoust, Shahrokh |
| title |
Subnational Fiscal Policy in Large Developing Countries: Some Lessons from the 2008-09 Crisis for Brazil, China and India |
| title_short |
Subnational Fiscal Policy in Large Developing Countries: Some Lessons from the 2008-09 Crisis for Brazil, China and India |
| title_full |
Subnational Fiscal Policy in Large Developing Countries: Some Lessons from the 2008-09 Crisis for Brazil, China and India |
| title_fullStr |
Subnational Fiscal Policy in Large Developing Countries: Some Lessons from the 2008-09 Crisis for Brazil, China and India |
| title_full_unstemmed |
Subnational Fiscal Policy in Large Developing Countries: Some Lessons from the 2008-09 Crisis for Brazil, China and India |
| title_sort |
subnational fiscal policy in large developing countries: some lessons from the 2008-09 crisis for brazil, china and india |
| publisher |
World Bank, Washington, D.C. |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2013/04/17580907/subnational-fiscal-policy-large-developing-countries-some-lessons-2008-09-crisis-brazil-china-india http://hdl.handle.net/10986/14447 |
| _version_ |
1764429333797011456 |
| spelling |
okr-10986-144472021-04-23T14:03:19Z Subnational Fiscal Policy in Large Developing Countries: Some Lessons from the 2008-09 Crisis for Brazil, China and India Fardoust, Shahrokh Ravishankar, V.J. ACCOUNTING AGGREGATE DEBT AGGREGATE EXPENDITURE AUTONOMY AVAILABILITY OF CREDIT BAILOUT BANK CREDIT BANK FAILURES BANK FINANCING BANK LOANS BANK POLICY BANKING SYSTEM BENEFICIARY BINDING CONSTRAINT BUDGET DEFICIT CAPITAL EXPENDITURE CAPITAL FLOWS CAPITAL INFLOWS CAPITAL INVESTMENT CAPITAL PROJECTS CENTRAL GOVERNMENT CENTRAL GOVERNMENTS CENTRAL REVENUES CENTRAL SPENDING CENTRAL TRANSFERS CIVIL SERVICE COLLATERAL COMMERCIAL BANKS COMPARATIVE ANALYSIS CONSTITUTIONAL MANDATE CONSUMER DURABLES CONTINGENT LIABILITIES CORPORATE INVESTMENT CREDIT FLOWS CREDIT MARKET CREDIT MARKETS CREDITORS CURRENT EXPENDITURES DEBT CRISIS DEBT FLOWS DEBT LEVELS DEBT RELIEF DEBT SERVICE DECENTRALIZATION DEFAULT RATES DEVELOPING COUNTRIES DEVELOPMENT BANK DEVOLUTION DOMESTIC BANK DOMESTIC BANKING DOMESTIC BANKS DOMESTIC BORROWING ECONOMIC CONDITIONS ECONOMIC TRANSACTIONS EMERGING ECONOMIES EMERGING MARKETS EMPLOYMENT ENTERTAINMENT TAXES EQUALIZATION EXPENDITURE EXPENDITURE CONTRACTION EXPENDITURE CUTS EXPENDITURE NEEDS EXPENDITURES EXTERNAL BORROWING FEDERAL COUNTRIES FEDERAL COUNTRY FEDERAL GRANTS FEDERALISM FINANCIAL CRISIS FINANCIAL DISTRESS FINANCIAL INSTITUTIONS FINANCIAL MANAGEMENT FINANCIAL SYSTEM FISCAL ADJUSTMENT FISCAL BALANCE FISCAL BALANCES FISCAL BURDEN FISCAL DECENTRALIZATION FISCAL DEFICIT FISCAL DEFICITS FISCAL FEDERALISM FISCAL FRAMEWORK FISCAL IMPACT FISCAL POLICIES FISCAL POLICY FISCAL SPACE FOREIGN DIRECT INVESTMENT GLOBAL ECONOMY GLOBAL MARKET GOVERNMENT BANKRUPTCY GOVERNMENT DEBT GOVERNMENT DEFICITS GOVERNMENT EXPENDITURE GOVERNMENT EXPENDITURES GOVERNMENT POLICY GOVERNMENT REVENUE GOVERNMENT REVENUES GOVERNMENT SPENDING GROSS DOMESTIC PRODUCT HOUSING HOUSING PRICES HUMAN CAPITAL INCOME LEVEL INDEBTED COUNTRIES INDEBTEDNESS INFLATION INFRASTRUCTURE INVESTMENT INFRASTRUCTURE INVESTMENTS INSTRUMENT INTEREST BURDEN INTEREST RATES INTERGOVERNMENTAL TRANSFERS INTERNATIONAL BANK INTERNATIONAL CREDIT INVESTMENT CLIMATE INVESTMENT DECISIONS INVESTMENT FLOWS INVESTMENT PROJECTS LAWS LEGAL PROHIBITION LEGISLATION LEVEL OF DEBT LEVY LIMITED BORROWING CAPACITY LOAN LOAN CATEGORIES LOCAL GOVERNMENT MACROECONOMIC EFFECTS MACROECONOMIC IMPACT MARKET DISCIPLINE MEDIUM-TERM FISCAL MINISTRY OF FINANCE MONETARY FUND MONETARY POLICIES MONETARY POLICY MORAL HAZARD MUNICIPAL GOVERNMENTS MUNICIPALITIES MUNICIPALITY NATIONAL TREASURY NET CURRENT REVENUE OUTSTANDING DEBT PERSONAL INCOME POLICY DECISION POLICY MAKERS POLICY RESPONSE POLICY RESPONSES PORTFOLIO PORTFOLIO INVESTMENT PRICE MOVEMENTS PRIVATE CAPITAL PRIVATE CAPITAL INFLOWS PRIVATE CREDIT PRIVATE INVESTMENT PROVINCES PROVINCIAL GOVERNMENTS PUBLIC CONSUMPTION PUBLIC DEBT PUBLIC EMPLOYEES PUBLIC ENTERPRISES PUBLIC FINANCE PUBLIC FINANCE STATISTICS PUBLIC FINANCES PUBLIC INVESTMENT PUBLIC INVESTMENTS PUBLIC SPENDING PURCHASING POWER REAL INTEREST REAL INTEREST RATES RECURRENT EXPENDITURE REGISTRATION FEES RESERVE RESERVE BANK RESERVE BANK OF INDIA REVENUE BASE REVENUE COLLECTIONS REVENUE GROWTH REVENUE RATIO REVENUE SHARING REVENUE SHORTFALL SAFETY NET SAVINGS STAMP DUTY STATE EXPENDITURES STATE GOVERNMENT STATE GOVERNMENTS SUB-NATIONAL SUB-NATIONAL FINANCES SUB-NATIONAL GOVERNMENTS SUBNATIONAL SUBNATIONAL DEBT SUBNATIONAL DEFICITS SUBNATIONAL ENTITIES SUBNATIONAL EXPENDITURES SUBNATIONAL FINANCE SUBNATIONAL FINANCES SUBNATIONAL GOVERNMENT SUBNATIONAL GOVERNMENT EXPENDITURES SUBNATIONAL GOVERNMENT FINANCE SUBNATIONAL GOVERNMENT FINANCES SUBNATIONAL GOVERNMENTS SUBNATIONAL UNITS TAX TAX BENEFITS TAX COLLECTIONS TAX REVENUE TAX REVENUES TAX SHARING TOTAL EXPENDITURE TOTAL EXPENDITURES TRANSPORT In response to the Great Recession of 2008, many national governments implemented fiscal stimuli packages in 2009 and 2010 to prevent further declines in aggregate demand and to jump start their economic recovery. Where subnational governments responded with fiscal contraction, as in the United States, the impact was muted; where states/provinces also expanded expenditures, as in China and India, the impact was magnified. Increases in recurrent expenditure, which were made in Brazil and India, acted as short-term stimulants; additional public investment, as in China, appears to have had a more lasting impact on growth. Large developing countries typically exhibit high interregional inequality in levels of development and global integration, resulting in differential magnitude and timing of the crisis impact. For example, coastal states in India were affected more severely and quickly than landlocked states; revenue moved in opposite directions in the two types of state in 2009. Where fiscal stress varies widely across subnational entities, central transfers alone cannot prevent pro-cyclicality of subnational fiscal response to a recession. There is need for flexibility in subnational borrowing within a sustainable fiscal framework. Many Indian states were able to maintain or accelerate their spending thanks to the additional borrowing permitted in 2009 and 2010. In comparison, limited borrowing capacity and lack of flexibility in federal grants restricted the contribution of Brazilian states to fiscal stimulus. Legal prohibition of subnational borrowing induced China's provinces to finance additional investments through extra-budgetary borrowing by nongovernment entities, with significant fiscal risks on account of contingent liabilities. 2013-07-10T18:35:43Z 2013-07-10T18:35:43Z 2013-04 http://documents.worldbank.org/curated/en/2013/04/17580907/subnational-fiscal-policy-large-developing-countries-some-lessons-2008-09-crisis-brazil-china-india http://hdl.handle.net/10986/14447 English en_US Policy Research Working Paper;No.6409 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, D.C. Publications & Research :: Policy Research Working Paper Publications & Research East Asia and Pacific Latin America & Caribbean South Asia Brazil China India |