Laws for Fiscal Responsibility for Subnational Discipline : International Experience

Liu, Lili; Webb, Steven B.

dc.creator	Liu, Lili
dc.creator	Webb, Steven B.
dc.date	2012-03-19T18:00:54Z
dc.date	2012-03-19T18:00:54Z
dc.date	2011-03-01
dc.date.accessioned	2023-02-17T20:55:08Z
dc.date.available	2023-02-17T20:55:08Z
dc.identifier	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110311132517
dc.identifier	http://hdl.handle.net/10986/3354
dc.identifier.uri	http://localhost:8080/xmlui/handle/CUHPOERS/244318
dc.description	Fiscal responsibility laws are institutions with which multiple governments in the same economy -- national and subnational --can commit to help avoid irresponsible fiscal behavior that could have short-term advantages to one of them but that would be collectively damaging. Coordination failures with subnational governments in the 1990s contributed to macroeconomic instability and led several countries to adopt fiscal responsibility laws as part of the remedy. The paper analyzes the characteristics and effects of fiscal responsibility laws in seven countries -- Argentina, Australia, Brazil, Canada, Colombia, India, and Peru. Fiscal responsibility laws are designed to address the short time horizons of policymakers, free riders among government units, and principal agent problems between the national and subnational governments. The paper describes how the laws differ in the specificity of quantitative targets, the strength of sanctions, the methods for increasing transparency, and the level of government passing the law. Evidence shows that fiscal responsibility laws can help coordinate and sustain commitments to fiscal prudence, but they are not a substitute for commitment and should not be viewed as ends in themselves. They can make a positive contribution by adding to the collection of other measures to shore up a coalition of states with the central government in support of fiscal prudence. Policymakers contemplating fiscal responsibility laws may benefit from the systematic review of international practice. One common trait of successful fiscal responsibility laws for subnational governments is the commitment of the central government to its own fiscal prudence, which is usually reinforced by the application of the law at the national as well as the subnational level.
dc.language	English
dc.relation	Policy Research working paper ; no. WPS 5587
dc.rights	CC BY 3.0 IGO
dc.rights	http://creativecommons.org/licenses/by/3.0/igo/
dc.rights	World Bank
dc.subject	ACCESS TO INFORMATION
dc.subject	ACCOUNTABILITY
dc.subject	ACCOUNTING
dc.subject	ACCOUNTING POLICIES
dc.subject	ACCOUNTING STANDARDS
dc.subject	ACCRUAL ACCOUNTING
dc.subject	ADMINISTRATIVE CONTROL
dc.subject	AGENCY PROBLEMS
dc.subject	AMORTIZATION
dc.subject	ARREARS
dc.subject	BAILOUT
dc.subject	BAILOUTS
dc.subject	BANK BAILOUTS
dc.subject	BANK FINANCING
dc.subject	BANK LOANS
dc.subject	BANKING REGULATIONS
dc.subject	BINDING CONSTRAINT
dc.subject	BLOCK GRANTS
dc.subject	BONDS
dc.subject	BORROWER
dc.subject	BORROWING COSTS
dc.subject	BUDGET BALANCE
dc.subject	BUDGET CONSTRAINT
dc.subject	BUDGET CONSTRAINTS
dc.subject	BUDGET DEFICIT
dc.subject	BUDGET DEFICITS
dc.subject	BUDGET PROCESS
dc.subject	BUDGETING
dc.subject	BUSINESS CYCLE
dc.subject	CAPITAL GROWTH
dc.subject	CAPITAL MARKETS
dc.subject	CAPITAL REQUIREMENTS
dc.subject	CENTRAL BANK
dc.subject	CENTRAL BANKS
dc.subject	CENTRAL GOVERNMENT
dc.subject	COLLATERAL
dc.subject	CONSOLIDATION
dc.subject	CONSUMPTION EXPENDITURE
dc.subject	CONTINGENT LIABILITIES
dc.subject	CONVERTIBILITY PLAN
dc.subject	COORDINATION FAILURES
dc.subject	COUNTRY COMPARISONS
dc.subject	CREDIBILITY
dc.subject	CREDIT CONTRACT
dc.subject	CREDIT MARKET
dc.subject	CREDIT MARKETS
dc.subject	CREDIT RATING
dc.subject	CREDIT RATINGS
dc.subject	CREDIT SYSTEM
dc.subject	CREDITOR
dc.subject	CREDITWORTHINESS
dc.subject	CURRENT EXPENDITURES
dc.subject	DEBT
dc.subject	DEBT BURDEN
dc.subject	DEBT CRISES
dc.subject	DEBT DATA
dc.subject	DEBT FINANCING
dc.subject	DEBT MANAGEMENT
dc.subject	DEBT MARKET
dc.subject	DEBT OBLIGATIONS
dc.subject	DEBT OUTSTANDING
dc.subject	DEBT PAYMENTS
dc.subject	DEBT RATIO
dc.subject	DEBT REDUCTION
dc.subject	DEBT RELIEF
dc.subject	DEBT RESTRUCTURING
dc.subject	DEBT RESTRUCTURING AGREEMENT
dc.subject	DEBT RESTRUCTURING AGREEMENTS
dc.subject	DEBT SERVICE
dc.subject	DEBT STOCK
dc.subject	DEBTOR
dc.subject	DEBTS
dc.subject	DECONCENTRATION
dc.subject	DEFICITS
dc.subject	DEVELOPING COUNTRIES
dc.subject	DEVELOPING COUNTRY
dc.subject	DEVOLUTION
dc.subject	DOMESTIC BORROWING
dc.subject	DOMESTIC CREDIT
dc.subject	ENFORCEMENT MECHANISMS
dc.subject	ENFORCEMENT POWER
dc.subject	EXCHANGE RATE
dc.subject	EXPENDITURE
dc.subject	EXPENDITURES
dc.subject	FEDERAL COUNTRIES
dc.subject	FEDERAL DISTRICT
dc.subject	FEDERALISM
dc.subject	FINANCES
dc.subject	FINANCIAL CRISIS
dc.subject	FINANCIAL INSTITUTIONS
dc.subject	FINANCIAL MANAGEMENT
dc.subject	FINANCIAL MARKET
dc.subject	FINANCIAL MARKETS
dc.subject	FINANCIAL RISKS
dc.subject	FINANCIAL STATEMENTS
dc.subject	FINANCIAL SYSTEM
dc.subject	FISCAL ADJUSTMENT
dc.subject	FISCAL AUTONOMY
dc.subject	FISCAL CONSTRAINTS
dc.subject	FISCAL CRISIS
dc.subject	FISCAL DECENTRALIZATION
dc.subject	FISCAL DEFICIT
dc.subject	FISCAL DEFICITS
dc.subject	FISCAL DISCIPLINE
dc.subject	FISCAL GAPS
dc.subject	FISCAL INSTITUTIONS
dc.subject	FISCAL LEGISLATION
dc.subject	FISCAL POLICIES
dc.subject	FISCAL POLICY
dc.subject	FISCAL REFORM
dc.subject	FISCAL SUSTAINABILITY
dc.subject	FLOATING DEBT
dc.subject	FOREIGN CURRENCY
dc.subject	GOVERNMENT BOND
dc.subject	GOVERNMENT BOND MARKET
dc.subject	GOVERNMENT BORROWERS
dc.subject	GOVERNMENT BORROWING
dc.subject	GOVERNMENT DEBT
dc.subject	GOVERNMENT FINANCE
dc.subject	GOVERNMENT GUARANTEE
dc.subject	GOVERNMENT INTERVENTION
dc.subject	GOVERNORS
dc.subject	HARD BUDGET CONSTRAINTS
dc.subject	HOLDING
dc.subject	INDEBTEDNESS
dc.subject	INFLATION
dc.subject	INFRASTRUCTURE DEVELOPMENT
dc.subject	INSTRUMENT
dc.subject	INTEREST COST
dc.subject	INTEREST RATES
dc.subject	INTERNATIONAL BANK
dc.subject	INTERNATIONAL BORROWING
dc.subject	INTERNATIONAL CREDIT
dc.subject	INTERNATIONAL FINANCIAL CRISIS
dc.subject	INTERNATIONAL INTEREST
dc.subject	INTERNATIONAL RATING AGENCIES
dc.subject	INVESTMENT SPENDING
dc.subject	ISSUANCE
dc.subject	LAWS
dc.subject	LEGAL CONSTRAINTS
dc.subject	LEGAL FRAMEWORK
dc.subject	LEGAL FRAMEWORKS
dc.subject	LEGISLATION
dc.subject	LENDER
dc.subject	LENDERS
dc.subject	LENDING DECISIONS
dc.subject	LEVEL OF GOVERNMENT
dc.subject	LOAN
dc.subject	LOAN GUARANTEES
dc.subject	LOCAL CURRENCY
dc.subject	LOCAL GOVERNMENT
dc.subject	LOCAL GOVERNMENTS
dc.subject	MACROECONOMIC ADJUSTMENT
dc.subject	MACROECONOMIC CRISIS
dc.subject	MACROECONOMIC ENVIRONMENT
dc.subject	MACROECONOMIC INSTABILITY
dc.subject	MACROECONOMIC STABILITY
dc.subject	MACROECONOMIC VARIABLES
dc.subject	MARKET DISCIPLINE
dc.subject	MARKET PRICING
dc.subject	MATURITY
dc.subject	MAYORS
dc.subject	MONETARY POLICIES
dc.subject	MONETARY POLICY
dc.subject	MORAL HAZARD
dc.subject	MORAL HAZARDS
dc.subject	MUNICIPAL FINANCE
dc.subject	MUNICIPALITIES
dc.subject	NATIONAL DEBT
dc.subject	NATIONAL SECURITY
dc.subject	NATIONAL TREASURY
dc.subject	NET ASSETS
dc.subject	NET DEBT
dc.subject	OPERATING EXPENSES
dc.subject	OPERATING REVENUE
dc.subject	OPERATING SURPLUS
dc.subject	PAYMENT OBLIGATIONS
dc.subject	PENALTIES
dc.subject	PENSIONS
dc.subject	POLITICAL AUTONOMY
dc.subject	PRINCIPAL-AGENT PROBLEM
dc.subject	PRINCIPAL-AGENT PROBLEMS
dc.subject	PRIVATE CREDITORS
dc.subject	PRIVATE INVESTMENTS
dc.subject	PROVINCES
dc.subject	PROVINCIAL DEBTS
dc.subject	PROVINCIAL FISCAL
dc.subject	PUBLIC BANKS
dc.subject	PUBLIC DEBT
dc.subject	PUBLIC FINANCE
dc.subject	PUBLIC FINANCE LAW
dc.subject	PUBLIC FINANCES
dc.subject	PUBLIC SECTOR DEFICIT
dc.subject	PUBLIC SERVICES
dc.subject	PUBLIC SPENDING
dc.subject	REDEMPTION
dc.subject	RENEGOTIATION
dc.subject	RESERVE
dc.subject	RESERVE BANK
dc.subject	RESERVE BANK OF INDIA
dc.subject	RETIREMENT
dc.subject	RETURN
dc.subject	REVENUE BASE
dc.subject	REVENUE SHARING
dc.subject	RISK PREMIUMS
dc.subject	SAVINGS
dc.subject	SOLVENCY
dc.subject	SOVEREIGN DEBT
dc.subject	SUB-NATIONAL BORROWERS
dc.subject	SUBNATIONAL
dc.subject	SUBNATIONAL DEBT
dc.subject	SUBNATIONAL DEFICITS
dc.subject	SUBNATIONAL FINANCE
dc.subject	SUBNATIONAL FINANCES
dc.subject	SUBNATIONAL GOVERNMENTS
dc.subject	SUPERVISION OF BANKS
dc.subject	SUPPLY OF CREDIT
dc.subject	TAX
dc.subject	TAX BASES
dc.subject	TAX POLICY
dc.subject	TAXATION
dc.subject	TRANSPARENCY
dc.subject	UNFUNDED MANDATES
dc.title	Laws for Fiscal Responsibility for Subnational Discipline : International Experience
dc.type	Publications & Research :: Policy Research Working Paper
dc.coverage	India
dc.coverage	Argentina
dc.coverage	Peru
dc.coverage	Australia
dc.coverage	Colombia
dc.coverage	Brazil