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Zápatí prezentace
1
Local finances management
Public Finance 2

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Many authors – Tiebout, Oates and others
Tiebout model/hypothesis (1956):
•„model yields a solution for the level of expenditures for local public goods which reflects the
preferences of the population more adequately than they can be reflected at the national level“
•
•individuals will move from one local community to another which maximizes their personal utility.
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•
Theory of Fiscal Federalism

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Oates „theorem“
̶Oates' Decentralization Theorem (Oates, 1972) „stating that in the absence of cost savings from
centralization and interjurisdictional externalities, fiscal responsibilities should be
decentralized. This argument implicitly assumes that the center is unresponsive to preference
heterogeneity and thereby is only able to implement uniform policies“ (Koethenbuerger, 2007)
30.9.2013

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The process of redistributing functions or powers from center to localities in term of hierarchy.
Dentralization concept is widely used in public administration, economics, law, but also in private
sector.
Decentralization of state power (public administration):
}Central government
}Regional government
}Local government
Decentralization

division of responsibilities: finance, tasks, policy
(central government-localities)
l important questions:
lWho makes the decisions about the programs?
lWho pays for these programs?
l examples
lGovernment rule – Localities administer
lGovernment pays – Localities carry out
Fiscal Federalism (FF)

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6
Number of subnational governments by geographical areas (2018)
Source: OECD/UCLG (2019),2019 Report of the World Observatory on Subnational Government Finance and
Investment –Key Findings

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Breakdown of responsibilities across SNG levels: a general scheme
Source: OECD/UCLG (2019),2019 Report of the World Observatory on Subnational Government Finance and
Investment –Key Findings

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8
Subnational government expenditure as a percentage of GDP and general government expenditure (2016)
Source: OECD/UCLG (2019),2019 Report of the World Observatory on Subnational Government Finance and
Investment –Key Findings

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9
Subnational resources and autonomy: no clear cut frontiers
Source: OECD/UCLG (2019),2019 Report of the World Observatory on Subnational Government Finance and
Investment –Key Findings

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10
Subnational government revenue by category as a percentage of GDP (2016)
Source: OECD/UCLG (2019),2019 Report of the World Observatory on Subnational Government Finance and
Investment –Key Findings

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11
The gap between subnational government expenditure and tax revenue is often large
Source: OECD/UCLG (2019),2019 Report of the World Observatory on Subnational Government Finance and
Investment –Key Findings

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Zápatí prezentace
12
Subnational government debt as a percentage of GDP and general government debt (2016)

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}Inhabitants 10 532 770
}14 regions (Prague-municipality and region)
}6 253 municipalities
} Special case- NUTS II. (created for monitoring EU statistic)
}Fiscal decentralization involves the transfer of taxing and spending powers to sub-national levels
of government
Czech republic and fiscal federalism

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̶Q & A
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