This paper examines the dynamic relationships among public sector efficiency, normative funding, regional indebtedness, extraordinary State-backed financing, and economic growth across Spain’s 15 common-regime Autonomous Communities over the period 2005-2019. Using a multivariate Granger-causality framework with graphical modelling –where causality is understood as predictive precedence rather than structural causation– and distinguishing between cash- and accrual-based measures of normative funding, we identify robust dynamic links and the role of liabilities accumulated through extraordinary financing mechanisms. At the aggregate level, the results show little net co-movement between public sector efficiency and the other variables. Region-specific causal networks, however, uncover suggestive and, in some cases, strong links involving efficiency, with markedly different signs and intensities. The weak aggregate relationship therefore reflects offsetting regional effects rather than the irrelevance of efficiency. We also find that cash shortfalls are associated with higher indebtedness in historically underfunded regions, whereas accrual measures mask this financial pressure. Extraordinary State-backed financing emerges as a key transmission channel in the Granger-causality sense and displays a strong feedback relationship with total debt, consistent with moral-hazard incentives when the central government acts as lender of last resort. Overall, the regional funding system lacks a systematic mechanism for rewarding efficient public spending, supporting a reform that combines adequate funding, debt discipline, and explicit efficiency incentives.
Intergovernmental transfers are central to fiscal federalism, fostering territorial equity across regions with diverse socio-economic conditions. This paper examines Uruguay, where transfers remain partly based on a composite index created more than two decades ago using a limited set of indicators. Using recent census and administrative data, we reassess the statutory allocation formula and evaluate an alternative multidimensional framework based on Principal Component and Factor Analysis. The results show that updating the existing formula generates significant reallocations, while the expanded indicator set and data-driven weighting methodology produce even larger redistributive effects, improving the equalization capacity of the transfer system
This paper provides new evidence for Spain’s Autonomous Communities (2010-2024) on institutional quality as a key driver of regional economic performance, focusing on its interactions with resource dependence and R&D intensity. Panel estimates show that resource dependence is robustly associated with lower growth, while institutional quality has no uniform direct effect. Instead, institutions operate mainly through conditional channels where resource-dependence effects appear sensitive to inference assumptions, whereas R&D-related interactions are more consistent. Findings highlight governance, diversification, and the composition of innovation policy as key factors for regional development in decentralized systems.
Designing equitable subnational transfers requires separating structural expenditure needs from managerial inefficiency and local fiscal preferences. We propose a governance-oriented framework combining Bayesian stochastic frontier analysis and Bayesian model averaging to identify needs transparently under model uncertainty. Using Spain’s regional health system (2010-2022, excluding 2020-2021) as a testing ground, we condition out fiscal capacity and behaviour via a financing decomposition. Results show that age structure (PPE) dominates structural costs and insularity is a robust positive cost shifter; surface area does not meet the robustness threshold for inclusion in the formula. Health status (mortality) is excluded from the needs-weight formula because its independent contribution cannot be reliably identified once fiscal capacity is controlled for; we treat this as an open question for future research rather than evidence that morbidity is not a genuine cost driver. The framework generalises to other federal systems facing demographic and territorial pressures.
This article argues the existence of a linear relationship between a parametric model of income equalization and the Gini coefficient, G . Concretely, a linear relationship of the form G = A – Aρ, where ρ is the parameter that determines the power of redistribution of that model and A is a positive number. The article: (i) shows why this linear relationship appears and identifies A in terms of recognizable economic terms; and (ii), in the context of this model, explores if the Gini coefficient can be decomposed by income groups and if the parameter ρ plays a relevant part in this decomposition.
