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Economics of Governance

, Volume 14, Issue 2, pp 185–203 | Cite as

Central government control and fiscal adjustment: Norwegian evidence

  • Arnt O. HoplandEmail author
Original Paper

Abstract

Norwegian local governments that violate the balanced budget rule are placed in a register. The consequence of being in the register is that the budget and resolutions to raise new loans must be approved by the county governor, the central government’s representative in the county. Local governments in the register are subject to stronger central government control and must tighten their budgetary policy in order to be removed from the register. The findings suggest that local governments in the register improve their operating surplus, mainly due to cost reductions.

Keywords

Fiscal adjustment Balanced budget regulations Fiscal federalism 

JEL Classification

H71 H72 H74 H77 

Notes

Acknowledgments

Valuable comments and suggestions from Lars-Erik Borge, Kåre Johansen, Mattias Polborn (the editor), Jørn Rattsø, an anonymous referee and participants at the 11th LAGV Conference (Marseille), a PhD workshop in Uppsala, and seminar participants in Bergen and Trondheim are much appreciated. I am grateful for funding from the Norwegian Ministry of local government and regional development. Staff at the ministry have also provided data and kindly guided me through the laws and regulations surrounding the Robek register, in particular Evy Tynes Johnsen and Torill Torgrimsen. All remaining errors are my own.

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Copyright information

© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  1. 1.Department of EconomicsNorwegian University of Science and TechnologyDragvoll, TrondheimNorway

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