Why Focus on Spending Needs Factors? The Political Economy of Fiscal Transfer Reforms in Mexico

30 Pages Posted: 25 Jan 2008

See all articles by Ehtisham Ahmad

Ehtisham Ahmad

International Monetary Fund (IMF)

José Antonio González Anaya

Mexican Ministry of Finance and Public Credit

Giorgio Brosio

University of Turin

Mercedes García-Escribano

International Monetary Fund (IMF)

Ben Lockwood

University of Warwick - Department of Economics; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

Ernesto Revilla

Mexican Ministry of Finance and Public Credit

Date Written: October 2007

Abstract

An equalization system ensures that subnational governments can provide similar level of public services at a comparable level of own tax-effort. This paper focuses on the importance of spending needs factors in the design of equalization transfers as well as special purpose transfers - and the role that this could have in setting the agenda for better accountability for recipient governments, illustrating both design and implementation questions with examples from Mexico. The paper also takes into account the difficult political economy constraints to reforming any system of transfers.

Keywords: Working Paper, Fiscal policy, Mexico, Government expenditures, Public sector, Economic reforms, Political economy

Suggested Citation

Ahmad, Ehtisham and González Anaya, José Antonio and Brosio, Giorgio and García-Escribano, Mercedes and Lockwood, Ben and Revilla, Ernesto, Why Focus on Spending Needs Factors? The Political Economy of Fiscal Transfer Reforms in Mexico (October 2007). IMF Working Paper No. 07/252, Available at SSRN: https://ssrn.com/abstract=1087167

Ehtisham Ahmad

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

José Antonio González Anaya

Mexican Ministry of Finance and Public Credit ( email )

Palacio Nacional, Patio Central
Mexico City, Federal District 06000
Mexico

Giorgio Brosio

University of Turin ( email )

Facoltà di Economia
Corso Unione Sovietica 218 bis
Torino, 10134
Italy

Mercedes García-Escribano

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Ben Lockwood (Contact Author)

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom
+44 24 7652 8906 (Phone)
+44 24 7657 2548 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Ernesto Revilla

Mexican Ministry of Finance and Public Credit ( email )

Palacio Nacional, Patio Central
Mexico City, Federal District 06000
Mexico

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