Abstract

ASTUDILLO, Marcela; BLANCAS, Andrés  and  FONSECA CORONA, Francisco Javier. The Transparency of Subnational Debt a Mechanism to Limit its Growth. Prob. Des [online]. 2017, vol.48, n.188, pp.29-54. ISSN 0301-7036.

The aim of this paper is to demonstrate the lack of an explicit transparency obligation in terms of disclosing the amount of subnational public debt and limiting it in relevant legislation, which effectively allow subnational debt to balloon. To analyze this matter, we estimate two econometric models that combine panel data and time series to determine the impact of transparency requirements and regulatory constraints on the behavior of state debt. It was found that on average, debt tended to be 28% higher in states where it was not mandatory to disclose debt levels; likewise, it was observed that on average, debt was 43% lower in states with explicit debt limits.

Keywords : Subnational debt; corruption; transparency; public finance; econometric models; states.

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