Intergovernmental Transfer Schemes Research Articles

Institutionalization of a Formalized Intergovernmental Transfer Scheme for Asylum Seekers in Germany: TheKönigstein Keyas an Indicator of Federal Justice

AbstractCrisis-induced refugee migration raises questions of fair responsibility-sharing among political territories. This is relevant for nation states and for subnational territories alike. Theories addressing this problem have mainly been developed with regard to international responsibility-sharing. They assume collective action problems when it comes to organising intergovernmental transfer schemes, something which cannot be easily overcome. It is not well understood how effective transfer schemes can be institutionalised when no hierarchical decision-making is in place. Complementary to that perspective, this paper builds upon constructivist institutional theories that suggest paying more attention to guiding ideas, which can be called upon when intergovernmental transfer schemes are at stake, and to criteria of rationality that can legitimately claim to embody this idea. Legitimate criteria of rationality are typically the result of “investments in form”, i.e. social practices which imbue material objects with certain qualities so that they stand for particular guiding ideas. The article tests this assumption empirically by tracing the institutionalisation process of the Königstein key (Königsteiner Schlüssel) as a dynamic formula for determining state quotas in Germany's refugee federalism. While important precedents of physical intergovernmental responsibility-sharing in refugee matters had already existed in West Germany, their translation to the territorial dispersal of non-German asylum seekers was highly controversial in the 1970s. In this case, resorting to the Königstein key proved to be feasible in part because, by then, the formula had already become a symbol of the idea of federal justice through its use in a variety of different and far less controversial policy fields. However, during the recent wave of refugee immigration it has increasingly become the object of critique.

Soft budget constraints and strategic interactions in subnational borrowing: Evidence from the German States, 1975–2005

Cooperative federations are usually characterized by the existence of bailout guarantees and intergovernmental transfer schemes. This paper explores whether such features of cooperative federations lead to subnational soft budget constraints using panel data from the German States covering the 1975–2005 period. The methodology is based on the premise that subnational governments’ borrowing will exhibit vertical and horizontal strategic interactions if they operate under soft budget constraints. Therefore, a test for strategic interactions in subnational borrowing can be used to infer whether a cooperative federation like Germany is susceptible to soft budget constraints. The results suggest that state borrowing in Germany exhibited horizontal but not vertical interactions during the time-frame of the analysis. This indicates (i) that German States faced soft budget constraints and (ii) that they were more concerned about the likelihood of a bailout than about its volume.

Vertical Imbalance and Local Fiscal Discipline in China

This article examines local fiscal behavior in contemporary China against the backdrop of decentralized spending responsibilities and recentralized revenues. Vertical imbalance after the 1994 tax-sharing system reform, coupled with other features of the fiscal institutions, is not conducive to conservative local fiscal behavior. Moreover, a main driving force behind the expansion of local governments is the politically motivated intergovernmental transfer scheme. The center in effect “buys” political stability in sensitive areas while holding local leaders accountable for their tax efforts. A dynamic panel analysis of Chinese counties reveals that a million-yuan increase in general transfer payment and salary raise subsidies would add, respectively, fifteen and sixteen employees to the county government payroll, other things being equal. At the same time, increased subsidies from upper-level governments do not “crowd out” or significantly affect local tax effort. Additional dynamic panel data analysis at the provincial level produced similar findings.

Dampak Desentralisasi Fiskal di Indonesia terhadap Pertumbuhan Ekonomi dan Disparitas Antar Daerah: Analisa Model Makro Ekonometrik Simultan

From January 1, 2001, when new autonomy laws were implemented, lndonesia began to move toward decentralization of what had been a highly decentralized. This policy adopts two complimentary laws. Law No.22/1999, which basically the devolution policy, has been accompanied by La No.25/1999, which basically reflect that decentralization policy in Indonesia has adopted the concept of ”money follows function”. Law No.25/1999 describe the fiscal decentralization process that will create a new intergovernmental transfer scheme between the central government and local government. Some of items in the law were really new ones such as the natural resources revenue sharing, income tax sharing, general allocation fund (OAF) and specifics allocation fund (SAF). The policies oftax and natural resource revenue sharing can result in fiscal imbalance among regions. Tax and natural resources revenue sharing will benefit only to urbanized and natural resources rich regions Because of it, Central Government created General Allocation Funds. This fund has block grant characteristic and will be given to regions by fiscal gap conception. The purpose is to equalize fiscal capacity among regions that in turn also can reduce disparity among them. The Simultaneous Macro Econometric Model is made for analyzing the fiscal decentralization impact to economic growth and region disparity. The policy simulation in this model used transfer fund from central government such as Tax Revenue Sharing, Natural Resource Revenue Sharing and General Allocation Fund. The simulation is carried out to see the optimality of various possible existing policies. The optimality is measured by evaluating the high rate of economic growth and low disparity.

Federal Fiscal Constitutions: Risk Sharing and Redistribution

The paper studies the political and economic determinants of regional public transfers. Specifically, it focuses on how such transfers are shaped by alternative fiscal constitutions, where a constitution is an allocation of fiscal instruments across different levels of governments plus a procedure for the collective choice of these instruments. Realistic restrictions on fiscal instruments introduce a tradeoff between risk sharing and redistribution. Different constitutions produce very different results. In particular, a federal social insurance scheme, chosen by voting, provides overinsurance, whereas an intergovernmental transfer scheme, chosen by bargaining, provides underinsurance.

Intergovernmental Transfers and Poverty Alleviation

In this paper the design of intergovernmental transfer schemes in a federation is analysed, focusing on schemes that can have a significant impact on improving interpersonal distribution in the sense of alleviating poverty. It is argued that states with a lower income have larger concentrations of poor persons and that their ability to combat poverty is lower and their opportunity cost higher. Federal transfers are not only a cost-effective means of enabling such states to undertake nationally optimal levels of poverty alleviation but also a way of ensuring that they actually do so. The distribution of intergovernmental transfers in India during the seventh five-year plan is examined, and it is argued that general-purpose and specific-purpose transfers were inadequate and imperfectly designed from the perspective of poverty alleviation.