How do subnational governments react to shocks to different revenue sources? Evidence from hydrocarbon-producing provinces in Argentina
Loading...
Date
2021
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
Based on the fiscal regime that prevailed in Argentina from 1988 to 2003, we estimate the effects that changes in intergovernmental transfers and hydrocarbon royalties had on provincial public consumption and debt. From a one-peso increase in intergovernmental transfers, all provinces spent 76 centavos on public consumption and decreased their debt by 22 centavos. However, when hydrocarbon-producing provinces faced a one-peso increase in royalties, they saved 95 centavos. We provide evidence that the exhaustible nature of royalties may explain this saving reaction in hydrocarbon-producing provinces.
Description
Keywords
Tax sharing regime, Intergovernmental transfers, Non-renewable resources, Hydrocarbon royalties, Provincial public consumption and debt, Argentina