Intergovernmental Fiscal Relations: Universal Principles, Local Applications

The key aspects of intergovernmental fiscal relations must be dealt with in the specific circumstances of each country. Nonetheless, certain basic questions invariably come up in every country. The present paper attempts to digest and reflect upon what we have learned to date about such ‘universal’ issues. After a brief introduction, Sections 2 through 4 of the paper review the three key instrumental components of intergovernmental fiscal relations in any country – expenditures, revenues, and transfers. Section 5 discusses sub-national borrowing and the implications of decentralization for macroeconomic management. Section 6 considers several institutional aspects of decentralization. A brief Section 7 concludes.