Does fiscal autonomy always fuel financial health in local governments? A cross-country analysis

What is it about?

Studies suggest increased fiscal autonomy enhances local governments' financial health, while reliance on higher levels of funding often leads to deterioration. Analyzing municipalities across nine regions (Bosnia and Herzegovina, Czech Republic, France, Italy, Portugal, Spain, and US states Colorado and Virginia), we find that while fiscal autonomy may improve long-term solvency, it can strain short-term liquidity and budget stability, complicating overall financial health.

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