The role of institutions in successful fiscal arrangements: The case of Australia and Argentina

This paper discusses the role of institutions in successful fiscal arrangements by comparing the fiscal equalization system of two nations, Argentina and Australia. The paper shows that Australia's fiscal vertical and horizontal equalisation model is on the whole simpler, more transparent, efficient and accountable to that of Argentina. The paper also illustrates Argentina's agency problem in fiscal financial arrangements. A major challenge for developing countries like Argentina is to strengthen their institutional matrices. One way of achieving this is through the consolidation of Argentina’s institutions. Another is to adopt an eclectic approach to 'institutional matrix' building. Looking at Australia's experience might be the way forward for Argentina's development.