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Fiscal Decentralization and Budget Control

Laura von Daniels, Free University Berlin and German Institute for International and Security Affairs (SWP), Berlin, Germany
Fiscal Decentralization and Budget Control explores possible institutional solutions to fiscal instability in countries that have traditionally been caught up in problems of over-expenditure and over-indebtedness. How can governments control spending pressure from influential groups, often representing historically grown regional interests? Drawing on a mix of statistical analyses and case studies in institutional theory, the book provides new insights on previous stabilizations in Latin America and facilitates a better understanding of common dynamics of deficits and debt accumulation.
Extent: 224 pp
Hardback Price: $120.00 Web: $108.00
Publication Date: 2016
ISBN: 978 1 78347 594 0
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  • Development Studies
  • Development Economics
  • Development Studies
  • Economics and Finance
  • Political Economy
  • Politics and Public Policy
  • Political Economy
  • Public Policy
How can governments control spending pressure from influential groups, often representing powerful regional interests? This book is concerned with institutional solutions that allow modern nation states to balance historically grown cultural, political and economic diversity.

Laura von Daniels combines different literatures in economics and political science, and draws on interviews with former government leaders, and country experts from international organizations. She applies this research to topics such as fiscal institutions and budget balances, presenting a critical review of different institutional approaches to resolving fiscal imbalances and public indebtedness.

Students and scholars of various disciplines, including politics, public and social policy, economics and business will find the discussions and detailed description of institutional reforms in emerging market nations to be of use to their research. It will also be of interest to practitioners working on fiscal decentralization and budget control.
‘This book makes an excellent contribution to our understanding of the role of budgetary institutions in fiscal stabilization in emerging market economies. Focusing on the governance structure Laura von Daniels broadens the standard perspective in political science by analyzing the interplay between fiscal federalism and incentives of budget players. The theoretical underpinnings, case studies and empirical analysis are well-written and highly educational. The book holds interesting policy lessons which could inspire the debate on improving fiscal rules and budgetary institutions and procedures.’
– Ludger Schuknecht, Chief Economist, Ministry of Finance, Germany

‘Fiscal Decentralization and Budget Control makes a simple, but very powerful argument: fiscal decentralization can only work if it is supported by sound national fiscal institutions. Laura von Daniels analyzes in an elegant and succinct manner cases of institutional reforms in Latin America and draws important conclusions for the region and beyond.’
– Achim Kemmerling, CEU, Budapest
Contents 1. Fiscal Institutions and Budget Balances 2. Overview: Institutional Approaches to Fiscal Imbalance and Public Indebtedness 3. Fiscal Institutions and Their Effects on Public Households 4. Fiscal Imbalances in Latin American and Caribbean Countries 5. Fiscal Stabilization, Subnational Fiscal Indiscipline and Institutional Reform in Brazil 6. Fiscal Federalism under Decentralized Budgetary Institutions in Argentina 7. Comparing Institutional Reform Success in Argentina and Brazil 8. Conclusion: Balancing Subnational Fiscal Autonomy and Overall Fiscal
Stability References Index