1887

OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

English, French

Getting the Most Out of Public Sector Decentralisation in Spain

In about two decades, Spain was transformed from one of the most centralised countries to one of the most decentralised. Spending functions were devolved rapidly. The regions have exercised their discretionary powers quite extensively and innovative policies have been implemented. But devolution was also accompanied by a hike in public employment and pressures on public spending, reflecting duplication in resources and poor co-ordination across and between government levels. The recent devolution of taxing powers could raise the accountability of the regions and, thus, cost-consciousness, although their effective use has been limited. Securing fiscal discipline would require better information on sub-national governments’ policies and outcomes so as to allow citizens to press for improved performance. The financing system of the regions also needs to be reformed to ensure sustainability in the face of changing demographics, while the fiscal rules need to be upgraded to avoid recourse to off-budget operations. This Working Paper relates to the 2005 OECD Economic Survey of Spain (www.oecd.org/eco/surveys/spain).

English

Keywords: fiscal discipline, intergovernmental grants, sub-national government, fiscal rules, Spain, fiscal federalism
JEL: H4: Public Economics / Publicly Provided Goods; H1: Public Economics / Structure and Scope of Government; H2: Public Economics / Taxation, Subsidies, and Revenue; H7: Public Economics / State and Local Government; Intergovernmental Relations; H5: Public Economics / National Government Expenditures and Related Policies
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