A Framework for Evaluating Alternate Institutional Arrangements for Fiscal Equalization Transfers

Fiscal equalization programs are fairly common features of intergovernmental fiscal relations in industrial countries. Some developing countries have also recently introduced these programs and still others are contemplating such programs. Institutional arrangements for fiscal equalization vary acro...

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Main Author:	Shah, Anwar
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCOUNTABILITY ADMINISTRATIVE REFORM AUTONOMY BORROWING CENTRAL GOVERNMENT GUARANTEES CITIZEN PARTICIPATION DEBT DEBT MANAGEMENT EMPLOYMENT EQUALIZATION FEDERAL REVENUE SHARING FISCAL CAPACITY FISCAL FEDERALISM FISCAL GAPS FISCAL POLICY INSTITUTIONAL ARRANGEMENTS INSTITUTIONAL CHANGE INSTITUTIONAL ECONOMICS INSTITUTIONAL FRAMEWORK INTERGOVERNMENTAL FINANCE INTERGOVERNMENTAL FISCAL RELATIONS INTERGOVERNMENTAL TRANSFERS LEGISLATION LOCAL AUTHORITIES LOCAL AUTONOMY LOCAL GOVERNMENT LOCAL GOVERNMENT FINANCE LOCAL GOVERNMENT ORGANIZATION LOCAL GOVERNMENT STRUCTURE LOCAL GOVERNMENTS MANDATES MIGRATION MUNICIPAL MUNICIPALITIES POLITICAL ECONOMY PROVINCES PROVINCIAL CABINETS PROVINCIAL GOVERNMENTS PUBLIC PUBLIC ADMINISTRATION REVENUE MOBILIZATION REVENUE SHARING STATE GOVERNMENTS TAX SHARING TAXATION TRANSACTION COSTS TRANSITION ECONOMIES
Online Access:	http://documents.worldbank.org/curated/en/2005/12/6451977/framework-evaluating-alternate-institutional-arrangements-fiscal-equalization-transfers http://hdl.handle.net/10986/8584

id	okr-10986-8584
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spelling	okr-10986-85842021-04-23T14:02:43Z A Framework for Evaluating Alternate Institutional Arrangements for Fiscal Equalization Transfers Shah, Anwar ACCOUNTABILITY ADMINISTRATIVE REFORM AUTONOMY BORROWING CENTRAL GOVERNMENT GUARANTEES CITIZEN PARTICIPATION DEBT DEBT MANAGEMENT EMPLOYMENT EQUALIZATION FEDERAL REVENUE SHARING FISCAL CAPACITY FISCAL FEDERALISM FISCAL GAPS FISCAL POLICY INSTITUTIONAL ARRANGEMENTS INSTITUTIONAL CHANGE INSTITUTIONAL ECONOMICS INSTITUTIONAL FRAMEWORK INTERGOVERNMENTAL FINANCE INTERGOVERNMENTAL FISCAL RELATIONS INTERGOVERNMENTAL TRANSFERS LEGISLATION LOCAL AUTHORITIES LOCAL AUTONOMY LOCAL GOVERNMENT LOCAL GOVERNMENT FINANCE LOCAL GOVERNMENT ORGANIZATION LOCAL GOVERNMENT STRUCTURE LOCAL GOVERNMENTS MANDATES MIGRATION MUNICIPAL MUNICIPALITIES POLITICAL ECONOMY PROVINCES PROVINCIAL CABINETS PROVINCIAL GOVERNMENTS PUBLIC PUBLIC ADMINISTRATION REVENUE MOBILIZATION REVENUE SHARING STATE GOVERNMENTS TAX SHARING TAXATION TRANSACTION COSTS TRANSITION ECONOMIES Fiscal equalization programs are fairly common features of intergovernmental fiscal relations in industrial countries. Some developing countries have also recently introduced these programs and still others are contemplating such programs. Institutional arrangements for fiscal equalization vary across countries with wide variations in the form and membership of the relevant decisionmaking bodies. This paper provides a simple neo-institutional economics framework for assessing alternative institutional arrangements for their impacts on simplicity, transparency, and objectivity of the equalization program, as well as transaction costs for various parties involved. Comparing institutional arrangements across different countries is a daunting task. The success of these arrangements depends on a multitude of factors. The success of governance structures for fiscal matters may depend not only on the incentives regime associated with their inner structures but also their interactions with other formal and informal institutions in the country. This paper presents a simple framework to understand these incentives and interactions and draw implications for their impacts on transactions costs for the society as a whole and achievement of societal objectives. An application of these concepts to the specific case of institutional arrangements for fiscal equalization transfers are carried out and the predictions based on the theory are compared with observed experiences in major federal countries. The paper demonstrates that the simple new institutional framework presented here has a significant power for predicting potential impacts. The paper concludes, both in theory and practice, that the case for independent grants commission to enhance the transparency, equity, and accountability of the intergovernmental finance system is vastly exaggerated. 2012-06-20T20:36:43Z 2012-06-20T20:36:43Z 2005-12 http://documents.worldbank.org/curated/en/2005/12/6451977/framework-evaluating-alternate-institutional-arrangements-fiscal-equalization-transfers http://hdl.handle.net/10986/8584 English Policy Research Working Paper; No. 3785 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ACCOUNTABILITY ADMINISTRATIVE REFORM AUTONOMY BORROWING CENTRAL GOVERNMENT GUARANTEES CITIZEN PARTICIPATION DEBT DEBT MANAGEMENT EMPLOYMENT EQUALIZATION FEDERAL REVENUE SHARING FISCAL CAPACITY FISCAL FEDERALISM FISCAL GAPS FISCAL POLICY INSTITUTIONAL ARRANGEMENTS INSTITUTIONAL CHANGE INSTITUTIONAL ECONOMICS INSTITUTIONAL FRAMEWORK INTERGOVERNMENTAL FINANCE INTERGOVERNMENTAL FISCAL RELATIONS INTERGOVERNMENTAL TRANSFERS LEGISLATION LOCAL AUTHORITIES LOCAL AUTONOMY LOCAL GOVERNMENT LOCAL GOVERNMENT FINANCE LOCAL GOVERNMENT ORGANIZATION LOCAL GOVERNMENT STRUCTURE LOCAL GOVERNMENTS MANDATES MIGRATION MUNICIPAL MUNICIPALITIES POLITICAL ECONOMY PROVINCES PROVINCIAL CABINETS PROVINCIAL GOVERNMENTS PUBLIC PUBLIC ADMINISTRATION REVENUE MOBILIZATION REVENUE SHARING STATE GOVERNMENTS TAX SHARING TAXATION TRANSACTION COSTS TRANSITION ECONOMIES
spellingShingle	ACCOUNTABILITY ADMINISTRATIVE REFORM AUTONOMY BORROWING CENTRAL GOVERNMENT GUARANTEES CITIZEN PARTICIPATION DEBT DEBT MANAGEMENT EMPLOYMENT EQUALIZATION FEDERAL REVENUE SHARING FISCAL CAPACITY FISCAL FEDERALISM FISCAL GAPS FISCAL POLICY INSTITUTIONAL ARRANGEMENTS INSTITUTIONAL CHANGE INSTITUTIONAL ECONOMICS INSTITUTIONAL FRAMEWORK INTERGOVERNMENTAL FINANCE INTERGOVERNMENTAL FISCAL RELATIONS INTERGOVERNMENTAL TRANSFERS LEGISLATION LOCAL AUTHORITIES LOCAL AUTONOMY LOCAL GOVERNMENT LOCAL GOVERNMENT FINANCE LOCAL GOVERNMENT ORGANIZATION LOCAL GOVERNMENT STRUCTURE LOCAL GOVERNMENTS MANDATES MIGRATION MUNICIPAL MUNICIPALITIES POLITICAL ECONOMY PROVINCES PROVINCIAL CABINETS PROVINCIAL GOVERNMENTS PUBLIC PUBLIC ADMINISTRATION REVENUE MOBILIZATION REVENUE SHARING STATE GOVERNMENTS TAX SHARING TAXATION TRANSACTION COSTS TRANSITION ECONOMIES Shah, Anwar A Framework for Evaluating Alternate Institutional Arrangements for Fiscal Equalization Transfers
relation	Policy Research Working Paper; No. 3785
description	Fiscal equalization programs are fairly common features of intergovernmental fiscal relations in industrial countries. Some developing countries have also recently introduced these programs and still others are contemplating such programs. Institutional arrangements for fiscal equalization vary across countries with wide variations in the form and membership of the relevant decisionmaking bodies. This paper provides a simple neo-institutional economics framework for assessing alternative institutional arrangements for their impacts on simplicity, transparency, and objectivity of the equalization program, as well as transaction costs for various parties involved. Comparing institutional arrangements across different countries is a daunting task. The success of these arrangements depends on a multitude of factors. The success of governance structures for fiscal matters may depend not only on the incentives regime associated with their inner structures but also their interactions with other formal and informal institutions in the country. This paper presents a simple framework to understand these incentives and interactions and draw implications for their impacts on transactions costs for the society as a whole and achievement of societal objectives. An application of these concepts to the specific case of institutional arrangements for fiscal equalization transfers are carried out and the predictions based on the theory are compared with observed experiences in major federal countries. The paper demonstrates that the simple new institutional framework presented here has a significant power for predicting potential impacts. The paper concludes, both in theory and practice, that the case for independent grants commission to enhance the transparency, equity, and accountability of the intergovernmental finance system is vastly exaggerated.
format	Publications & Research :: Policy Research Working Paper
author	Shah, Anwar
author_facet	Shah, Anwar
author_sort	Shah, Anwar
title	A Framework for Evaluating Alternate Institutional Arrangements for Fiscal Equalization Transfers
title_short	A Framework for Evaluating Alternate Institutional Arrangements for Fiscal Equalization Transfers
title_full	A Framework for Evaluating Alternate Institutional Arrangements for Fiscal Equalization Transfers
title_fullStr	A Framework for Evaluating Alternate Institutional Arrangements for Fiscal Equalization Transfers
title_full_unstemmed	A Framework for Evaluating Alternate Institutional Arrangements for Fiscal Equalization Transfers
title_sort	framework for evaluating alternate institutional arrangements for fiscal equalization transfers
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2005/12/6451977/framework-evaluating-alternate-institutional-arrangements-fiscal-equalization-transfers http://hdl.handle.net/10986/8584
_version_	1764408047513370624

A Framework for Evaluating Alternate Institutional Arrangements for Fiscal Equalization Transfers

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