Global Decentralization and the Subnational Debt Problem

Fiscal decentralization and public debt

Excessive borrowing by subnational governments due to soft budget constraints and intergovernmental coordination failures might be one of the perils of decentralization. Despite a large body of case studies, empirical investigations on whether decentralization increases consolidated public debt levels are still scarce. This paper contributes to the literature by exploring econometrically for se...

Subnational Debt of China: The Politics-Finance Nexus*

Using unique proprietary loan-level data, we provide the first comprehensive study on China’s local government debt, which was off-balance sheet. Policy and commercial banks, both of which are state owned, are the main financiers of local governments. We find that notwithstanding their prevalent nonprofit goal of raising social welfare, policy loans perform remarkably better than commercial loa...

The Implications of Electoral Competition for Fiscal Decentralization and Subnational Autonomy in Mexico By

Loan Commitments and the Debt Overhang Problem

The debt overhang problem is shown to arise in the context of an entrepreneurial project that requires a sequence of investments financed by an outside lender. The entrepreneur, not internalizing losses accruing to the lender which financed the initial investments, may inefficiently cancel the project and instead pursue an outside opportunity. It is shown that loan commitments (contracts that a...

Indicators for monitoring hunger at global and subnational levels.

This paper presents three different hunger indicators and outlines how they can be used to assess the extent of food insecurity in population groups globally and within countries at community, regional, or other subnational levels. Hunger refers to the supply, access, consumption, and intake of food at levels that are insufficient to fulfill human requirements. If the requirements are not met t...