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Does Local Autonomy Enhance the Autonomy in Local Public Finance? : Evidence from the Case of Korea
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Type
Academic journal
Author
Joong-Ho Kook (Yokohama City University)
Journal
Association Of Korean Economic Studies Korea and the World Economy Vol.16 No.1 KCI Accredited Journals
Published
2015.4
Pages
125 - 150 (26page)

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Does Local Autonomy Enhance the Autonomy in Local Public Finance? : Evidence from the Case of Korea
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Abstract· Keywords

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Since Korea began political local autonomy in 1995, it has not enhanced fiscal local autonomy. For example, while Korea has increased intergovernmental transfers such as local allocation tax and national subsidies, the share of its own revenues such as local taxes did not rise. There is a particular mechanism that the carry-over includes large amounts of grants-in-aid as one item of non-tax revenue. Even though central government tries to let local governments take efforts to increase the share of their own revenues ex ante, once the local governments increased their expenditure excessively, central government could not but bail out local governments ex post. This mechanism has caused a soft budget constraint problem in Korea. This paper specifies significant factors on the local public finance in Korea by estimating the demand function for local public services.
#local autonomy #transfers from central government #demand function #soft budget constraint #carry-over

Contents

1. INTRODUCTION
2. MODEL
3. CHARACTERISTIC FEATURES OF LOCAL PUBLIC FINANCE IN KOREA
4. ESTIMATION RESULTS
5. CONCLUDING REMARKS
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