1887

OECD Regional Development Working Papers

Working papers from the Regional Development Policy Division of the OECD cover a full range of topics including regional statistics and analysis, urban governance and economics, rural governance and economics, and multi-level governance. Depending on the programme of work, the papers can cover specific topics such as regional innovation and networks, the determinants of regional growth or fiscal consolidation at the sub-national level.

English

A Sub-national Perspective on Financing Investment for Growth I - Measuring Fiscal Space for Public Investment

Influences, Evolution and Perspectives

Sub-national governments are key players for public investment, as they are responsible on average for 62% of total public investment in OECD countries. This article analyses the different factors affecting sub-national governments’ fiscal space for public investment. It proposes an indicator for measuring this fiscal space and analyses the evolution of its different components over 2007-2012. The article shows that the global financial crisis and the ensuring consolidation drive have reduced sub-national governments’ fiscal space for public investment, through a downward pressure on revenues, increased expenditure obligations, and constrained capacity to borrow or issue debt on financial markets.

English

Keywords: public investment, public services, institutions, sub-national government, fiscal space, fiscal relations across levels of government
JEL: H74: Public Economics / State and Local Government; Intergovernmental Relations / State and Local Borrowing; H41: Public Economics / Publicly Provided Goods / Public Goods; G28: Financial Economics / Financial Institutions and Services / Financial Institutions and Services: Government Policy and Regulation; H71: Public Economics / State and Local Government; Intergovernmental Relations / State and Local Taxation, Subsidies, and Revenue; H77: Public Economics / State and Local Government; Intergovernmental Relations / Intergovernmental Relations; Federalism; Secession
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