Efficient Centralized Earmarking Under Decentralized Fiscal Commitments

26 Pages Posted: 28 Nov 2013

See all articles by Emilson Delfino Silva

Emilson Delfino Silva

University of Alberta - Department of Marketing, Business Economics & Law

Date Written: November 25, 2013

Abstract

Earmarked federal grants are ubiquitous and significant. Traditional fiscal federalism is unable to explain the widespread utilization of such grants. Recent arguments focusing on the potential benefits of centralized earmarking in reducing incentives for the creation of soft budgets at sub-central government levels merit formalization. This is the main motivation for the paper. The fruits of the analysis provide a clear normative prescription: the central government should earmark its grants in order to redistribute private consumption and public expenditures incurred in the provision of all public goods that are prone to be determined strategically under decentralized fiscal commitments.

Keywords: earmarked grants, decentralized fiscal commitments, soft budgets, selective decentralized leadership

JEL Classification: C72, D62, H41, H77

Suggested Citation

Delfino Silva, Emilson, Efficient Centralized Earmarking Under Decentralized Fiscal Commitments (November 25, 2013). Available at SSRN: https://ssrn.com/abstract=2360190 or http://dx.doi.org/10.2139/ssrn.2360190

Emilson Delfino Silva (Contact Author)

University of Alberta - Department of Marketing, Business Economics & Law ( email )

Edmonton, Alberta T6G 2R6
Canada

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