Series: Occasional Papers. 1807.
Author: Mar Delgado-Téllez and Javier J. Pérez.
Published in: Public Finance Review
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Abstract
We analyze from an empirical point of view the evolution and determinants of Spanish
regional public debt. Spain offers an interesting case study because of its high level of fiscal
decentralization, implemented gradually during the past four decades, the parallel entry into
force of a number of national fiscal rules in that period, and the heterogeneity of its regions,
both in terms of economic fundamentals and some institutional features. Our main findings
are the following: i) regional governments’ fiscal policies reacted to public debt increases,
on average, over the sample of study; ii) fiscal rules played a limited role in controlling debt
surges, being only marginally effective in some instances, like high debt situations; iii) a
higher degree of regional fiscal co-responsibility tends to be linked to more subdued debt
dynamics; iv) market-disciple indicators have encouraged some discipline at the regional
level, and v) regional non-standard (commercial) debt surges present explanatory power on
the standard measure of public debt.