Principles of Fiscal Decentralization

Unit 2: Assignment of Expenditure Responsibilities
 
The first fundamental step in the design of a system of intergovernmental fiscal relations should be to clearly determine the assignment of expenditure responsibilities within the public sector. First, what are the economic roles of government, and second, what should the functions and expenditure responsibilities of each level of government be in a decentralized system of government? In other words, who will do what and who will pay for what? On many occasions, instability and controversies in decentralized systems have resulted from unclear expenditure assignments or lack of clarity regarding the competencies of different levels of government.

This unit provides an overview of how expenditure responsibilities should be assigned to different levels of government. What is the subsidiarity principle? Which level of government should be responsible for ensuring economic stability and a fair income distribution? How should expenditure responsibilities be assigned to ensure an efficient allocation of resources?

• Intergovernmental Fiscal Relations and the Assignment of Expenditure Responsibilities  (Jorge Martinez - 15 pages)
  Overview Paper: 241 KB  

• The Economic Roles of Government   (Roy Bahl - 4:43 min)
  Video Presentation: 2.19 MB  
  MP3 Audio Only: 2.13 MB  
  Presentation Slides: 0 KB  

• The Expenditure Assignment Question   (Roy Bahl - 25:24 min)
  Video Presentation: 11.8 MB  
  MP3 Audio Only: 11.5 MB  
  Presentation Slides: 0 KB