2005/06/01 by Julia Darby, V. Anton Muscatelli, Graeme Roy · 1 citation
Economics, Econometrics and Finance · Social Sciences · #Capital expenditure #Central government #Consolidation (business) #Decentralization #Economic policy #Economics #Finance #Fiscal Policies and Political Economy #Fiscal Policy and Economic Growth #Fiscal federalism #Local Government Finance and Decentralization #Local government #Macroeconomics #Market economy #Political science #Public administration #Public economics
paper · doi:10.1111/j.1475-5890.2005.00009.x
openalex publication_date 2005/06/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/02
This paper contributes to the established literature on fiscal consolidations by investigating the distinct behaviour of central and sub-central tiers of government during general government consolidation attempts. In the light of different degrees of decentralisation across OECD countries, and the different responsibilities devolved to sub-central tiers, we believe that this approach offers an illuminating insight into the analysis of fiscal consolidations and their success. We show that the involvement of the sub-central tiers of government is crucial to achieving cuts in expenditure, particularly in relation to the overall size of the government wage bill. In addition, central governments appear to exert a strong influence on the expenditure of sub-central tiers through their grant allocations, and control of these allocations appears to have a considerable impact upon the overall success of consolidation attempts. Finally, we demonstrate that there is a skewness in cuts towards sub-central capital expenditure both when central governments cut grant allocations and when sub-central governments engage in lone consolidation attempts.