Los objetivos de d?ficit en las Comunidades Aut?nomas: una propuesta basada en la deuda

One of the most significant weaknesses of the Spanish fiscal governance framework is the lack of a coherent and transparent process for setting out the fiscal objectives. This paper proposes a simple methodology for the definition of such as objectives in terms of public debt and deficit in the Spanish regions. Based on the existing framework of the European Stability and Growth Pact, the fiscal efforts needed to decrease the regional public debt up to a benchmark value are computed. Some scenarios are shown regarding different parametrizations of such benchmark and the speed of convergence towards it. A mechanism of penalties is also proposed taking structural adjustments and the business cycle into consideration. The particular case of Valencian Community is used to show how to apply this methodology when the levels of public debt are far above from the average.

Automated summary

This study proposes a simple methodology for defining fiscal objectives in terms of public debt and deficit in the Spanish regions, and demonstrates its application using the case of Valencian Community.