How pro-cyclical is the fiscal policy of Argentine provinces? Evidence for the period 1998- 2017
Keywords:
fiscal policy, pro-cyclicality, ArgentinaAbstract
This paper provides evidence on the fiscal policy prociclicality of Argentina's subnational districts. I estimate an error correction model using a panel spanning 20 years (1998 – 2017) and all 24 districts. I find that fiscal policy of subnational jurisdictions is procyclical in all main categories of public expenditure and tax revenue except for automatic transfers, which have no statistical significance. The response of spending to the contemporary growth of the economic activity is greater than that estimated by Meloni (2018) for the period 1985-2007, similar to the ones obtained by Abbott et al. (2015) for Mexican states and lower than Arena and Revilla (2009) for Brazilian states. My estimates confirm that total resources are also procyclical with discretionary transfers being the most procyclically.
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