Fiscal federalism

Bednar’s Sub national governments (SNG)

burdenshifiting, rational transgressions and externalizing its costs

Rodden

SNG fiscal standing depends on what they think about the feds

if seen as strict parent, will behave, if seen as softie, will spend more irresponsibly bc can be bailed out

Spending behavior depends on beliefs about fed-. probabilistic

belief makes them choose one path over another even if they are not sure

The game

Transfers

normal, but when in crisis become bail-outs

Link between reputation and electoral accountability → voters will pressure fed/prov into bailing out

High transfers= reputation of bail out in pop eyes bc already so deep in it, shared or main responsibility

low transfer = understanding that not really fed’s pb

Vertical Fiscal imbalence (VFI) vs HFI

VFI: ability to raise money and what you must do/responsible for

fed ahev more capacity to raise $ but may be responsible for more costly jurisdictions, feds may have more money than what they need

HFI: different abilities to raise money (potatoes vs oil)

Of all transfers from fed to prov, 52% for Health care (conditional and per capita), 25% for equalization (fiscal capacity)