THE DISTRIBUTION OF PUBLIC EXPENDITURE AMONG LEVELS OF GOVERNMENT. A COMPARATIVE ANALYSIS BETWEEN SPAIN AND GERMANY.

Agustín Manzano

Fiscal Studies Institute (Spain)

Abstract

The Spanish Constitution of 1978 established a new distribution of responsibilities among different levels of government, based in the political autonomy for local governments as well as the newly-created regional governments, the so-called Autonomous Communities. The new constitutional arrangement, called “The State of the Autonomous Communities”, has been developed during the last two decades. In this context, regional governments have assumed important responsibilities in managing public expenditure.

Nowadays there is a debate in the Spanish society about the future of the new model. Has the decentralization process gone too far or shoud it continue? To help answer this question it may be interesting to analyze the situation in other countries, and Germany, the most important federal country in Europe, might offer guidance.

In this paper we carry out a comparative analysis between Germany and Spain as to the distribution of expenditure responsibilities among the three levels of government. We use the functional classification of public expenditure to understand the differences between the two models and try to come to conclusions useful for policy making.