Municipal Fragmentation and Local Financial Condition

A sizeable literature investigates how intergovernmental competition affects various fiscal outcomes in a fragmented local landscape. However, it remains untested how the fragmentation affects the outcomes simultaneously. This study addresses the issue by condensing individual outcomes into a multifaceted concept of financial condition. Utilizing a pooled cross-sectional time-series approach on the metropolitan statistical areas in the U.S between 1972 and 2017, this study tests how financial condition of municipalities varies by competition among them. The finding exhibit adverse effects on their financial condition when a greater number of municipalities is identified.

Impact of fiscal institutions on public finances in the European Union: Review of evidence in the empirical literature

This paper examines the impact of budgetary institutions on public finances in the European Union on the basis of a critical survey of the relevant theoretical and empirical literature. In general, the authors find that fiscal institutions (namely fiscal rules) have successfully contributed to greater fiscal sustainability, reduced procyclicality of fiscal policies within the EU, and increased national ownership of fiscal rules by strengthening national fiscal frameworks. A fiscal reaction function was one of the widely used methods to determine the principal variables affecting fiscal outcomes. Some authors used cyclically-adjusted fiscal outcomes as the dependent variable representing the discretionary fiscal policy-making whereas others put emphasis on other fiscal outcomes. The samples of countries covered mostly the EU Member States, representing rather homogenous samples in the context of common EU fiscal framework. Institutional aspects used as independent variables differed significantly among authors and some could be added for future research. Based on the literature survey, several recommendations were made for fiscal policy-making.

How Does Fiscal Autonomy Influence Fiscal Outcomes Depending on Corruption

As fiscal decentralization has been vigorously implemented, fiscal autonomy has become more prevalent in subnational governments. However, fiscal outcomes with greater fiscal autonomy depend upon how well and how responsibly government finances are managed. This study examines how fiscal autonomy affects fiscal outcomes depending on the level of corruption by using a panel data set of 83 cities in South Korea from 2010 to 2017. According to the results, fiscal autonomy causes local governments to spend more. However, its effectiveness may differ based on the composition of fiscal autonomy and its expenditure categories. Additionally, this study finds that less corrupt local governments spend less and have less debt under higher levels of fiscal autonomy.

The Sources of Fiscal Fluctuations

This paper assesses the dynamic impact of global macroeconomic conditions, commodity price movements, shifts in portfolio preferences, and domestic shocks on fiscal outcomes—notably the budget deficit, its main components, and debt—across a wide range of countries. Heterogeneity is investigated across the level of development and other structural characteristics. Dynamics are explored via panel local projections, while robustness is assessed via dynamic panel and system GMM regressions. World growth, financial risk appetite, political events, and commodity export prices are key determinants of fiscal outcomes in EM, while domestic growth, commodity import prices, and banking crises appear to matter more in AE. Our estimates help quantify the amount of fiscal risk generated by various factors, and thus provide inputs for the design of potential insurance mechanisms or state-contingent debt instruments that could assist in smoothing fiscal fluctuations.

Can Employee Training Influence Local Fiscal Outcomes?

Employee training is often viewed as essential for incorporating performance management practices into public organizations, but few studies directly link training programs to subsequent changes in organizational outcomes. Typically, evaluations of the impact of training and management innovations more broadly focuses narrowly on improvements at the mean of the distribution, ignoring isomorphic pressures that may spur divergent responses at opposite tails of the distribution. We examine these notions by testing whether training local government personnel on the use of financial performance information in decision-making influences fiscal outcomes. Specifically, we compare the outcomes of North Carolina local governments whose employees participated in training on a new fiscal benchmarking tool at the University of North Carolina School of Government to peer governments that did not participate. Municipal governments with at least one trained employee experienced modest changes, on average, across most of the financial ratios reported in the benchmarking tool. By comparison, the dispersion of the reported outcomes declined considerably among municipal governments whose employees participated in training in comparison to control governments. The strength of this response increased with the number of public officials trained. The results indicate that employee training can facilitate the use of performance benchmarking systems in public sector decision-making. They also suggest that benchmarking without explicit performance targets may encourage convergence toward the average outcome.