Public expenditures and debt at the subnational level: Evidence of fiscal smoothing from Argentina

• M. Besfamille ^[1] ; N. Grosman ^[2] ; D. Jorrat ; O. Manzano ; P. Sanguinetti
  1. [1] Pontificia Universidad Católica de Chile

     Pontificia Universidad Católica de Chile

     Santiago, Chile

     
  2. [2] Universidad Maimónides

     Universidad Maimónides

     Argentina

     
• Localización: Documentos de Trabajo ( Instituto de Economía PUC ), ISSN-e 0717-7593, Nº. 482, 2017, págs. 1-47
• Idioma: inglés
• Enlaces
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• Resumen

  • This paper uses the particular features of the tax-sharing regime Coparticipación Federal de Impuestos and the fact that some provinces earn hydrocarbon royalties to investigate public expenditures and debt at the subnational level in Argentina. We obtain that facing a one peso increase in intergovernmental transfers, provinces spend on average 36 cents in public expenditures with no changes in public debt. On the other hand, when royalties increase one peso, 59 cents are used to pay back public debt while public expenditures are not affected. These results, which are robust to many different specifications of the basic regressions, suggest a non-negligeable expenditure/debt smoothing behavior of Argentine provinces.