Autor: Rezk Ernesto
Institución: Instituto de Economía y Finanzas
JEL: C1, H7
"Evidences of discretionary fiscal policy running counter stabilization objetives has always been a matter of concern for economists involved in Public Economics, as many an important contribution in the literature shows. Nevertheless, ample political and institutional decentralization processes devolving taxing power and spending faculties to subnational governments made the subject to regain momentum due to the greater weight subnational Public Finances now have. In this conection, the paper focuses on the performance of Argentine provinces during the period 2005-2019 in order to ascertain whether the classical pro cyclical pattern mentioned for central governments is also replicated at the subnational level. For that, dynamic panel data models standing for a conventional linear fiscal reaction function were regressed in the first stage whereas in the second stage non linearities were introduced allowing other factors to interact with cycle variables the result being that while results confirmed also pro ciclical patterns of discretionary fiscal policy at the subnational level, fiscal policy switched to counter cyclical patterns when dummies (e.g. provinces´s fiscal size) interacted with cycle variables in the second stage. Key words: pro and counter cyclical fiscal policy, dynamic panel models, fiscal rules. JEL Classification: C1, H7."