Informal Budgeting Mechanisms and the Expenditure Response to Revenue Sharing Transfers: Evidence from the State of Baja California, Mexico
Gestión y Política Pública, 2014
25 Pages Posted: 5 May 2013
Date Written: May 1, 2013
This article contributes to ongoing discussions about the organization of Mexico's fiscal federal system and the incentives on state governments that it creates. New empirical evidence suggests that revenue sharing transfers (participaciones) in Mexico have an asymmetric impact on state government expenditures outcomes. It is argued in this article that such asymmetries are due in part to informal decision-making mechanisms that influence intergovernmental budget negotiations and may place some entities in a advantageous position to access extra-budgetary funds. This research uses the Mexican state of Baja California as a case study to understand the way in which unofficial agreements could be affecting the expenditure response to revenue sharing transfers. The analysis allows one to generate hypotheses about features of the intergovernmental system that existing studies have not considered, and which may affect the sustainability of Mexico’s intergovernmental fiscal pact.
Keywords: Federalism, Budget politics, budget process, intergovernmental relations, federal transfers, Mexico
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