Does Fiscal Decentralization Influence Public Finance Debt? A Panel Regression Analysis of the OECD Countries

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Mohammed Ibrahim Gariba
https://orcid.org/0000-0002-5358-0155
Romana Provazníková
https://orcid.org/0000-0001-5584-5690

Abstract

Fiscal decentralization has recently gained popularity throughout the world. This study examines how revenue decentralization influences subnational budgetary balances and how it affects the general government debt in the OECD countries. We applied panel regression analysis to an annual panel dataset that includes data from 23 countries from 1990 to 2020. Then, we explore the relationship between fiscal/revenue autonomy and public finance debt thus budgetary balances at the SNG level. Our empirical findings suggest that higher levels of SNG budget discipline are associated with greater revenue autonomy. The findings also suggest that general governments should consider delegating greater fiscal autonomy to SNGs to achieve better fiscal outcomes, including lower levels of general government public debt. This information could be useful for policymakers who are looking to implement sustainable fiscal stewardship.

Article Details

How to Cite
Gariba, M. I., & Provazníková, R. (2023). Does Fiscal Decentralization Influence Public Finance Debt? A Panel Regression Analysis of the OECD Countries. Asia Proceedings of Social Sciences, 11(1), 128–132. https://doi.org/10.31580/apss.v11i1.2779
Section
8th ASIA International Conference 2022
Author Biographies

Mohammed Ibrahim Gariba, Institute of Economics Sciences, Faculty of Economics and Administration, University of Pardubice, 532 10 Pardubice, Czech Republic

Fiscal decentralization has recently gained popularity throughout the world. This study examines how revenue decentralization influences subnational budgetary balances and how it affects the general government debt in the OECD countries. We applied panel regression analysis to an annual panel dataset that includes data from 23 countries from 1990 to 2020. Then, we explore the relationship between fiscal/revenue autonomy and public finance debt thus budgetary balances at the SNG level. Our empirical findings suggest that higher levels of SNG budget discipline are associated with greater revenue autonomy. The findings also suggest that general governments should consider delegating greater fiscal autonomy to SNGs to achieve better fiscal outcomes, including lower levels of general government public debt. This information could be useful for policymakers who are looking to implement sustainable fiscal stewardship.

Romana Provazníková, Institute of Economics Sciences, Faculty of Economics and Administration, University of Pardubice, 532 10 Pardubice, Czech Republic

Fiscal decentralization has recently gained popularity throughout the world. This study examines how revenue decentralization influences subnational budgetary balances and how it affects the general government debt in the OECD countries. We applied panel regression analysis to an annual panel dataset that includes data from 23 countries from 1990 to 2020. Then, we explore the relationship between fiscal/revenue autonomy and public finance debt thus budgetary balances at the SNG level. Our empirical findings suggest that higher levels of SNG budget discipline are associated with greater revenue autonomy. The findings also suggest that general governments should consider delegating greater fiscal autonomy to SNGs to achieve better fiscal outcomes, including lower levels of general government public debt. This information could be useful for policymakers who are looking to implement sustainable fiscal stewardship.