On the political determinants of intergovernmental grants in decentralized countriesthe case of Spain

Resumen

This paper studies the effect of political vari ables on the gains obtained by Spanish regions in periodical bargaining of the intergovernmental financ ing agreements and on the regional distribution of discretional earmarked grants over the period 1987-2008. First, we find that the relationship betw een gains in transferred revenues and on regional public debt stocks depends on the period and the specific issues discussed in the corresponding negotiation, as ide from political affinity. Second, we show that the most discretional program of earmarked grants is strongly driven by electoral strategy. National incumbents tend to allocate in tergovernmental transfers where there are competitive regional elections. We also show that earmar ked grants are allocated in those regions where the incumbent performs better in national elections and, especially, in those where there are more seats to be w on. Hence we prove that both strategies are complementary rather than exclusive