Alberto José Figueras

Do intergovernmental transfers affect the distribution of manufacturing production across regions in federal countries? Theory and evidence for Argentina

ABSTRACT The effect of changes in the distribution of top-to-bottom intergovernmental transfers on the location of manufacturing production is analysed using a modified version of the footloose capital model. An increase in the share of transfers received by a region increases its share of manufacturing production the larger are transaction costs; the larger is the share of transfers going directly to consumers; the larger is the share of manufacturing consumption vis-à-vis non-tradable consumption; and the easier consumers can substitute among manufacturing varieties. Using data for Argentina for 1983-2005, the empirical analysis appears to support the existence of two distinctive regimes, with smaller/poorer provinces benefiting in terms of the location of manufacturing production as a response to an increase in transfers. Also, for these provinces, the benefits are greater if they are politically aligned with the federal government, especially through the receipt of discretionary transfers. For large/rich provinces, the evidence is less conclusive.

Analysis of Regional Income Mobility in Argentina

We study regional income mobility in Argentina using annual data for the 1980 – 1998 period. The Hodrick-Prescott filter allows us to disentangle the cyclical from the trend components in the series. Annual transition matrices are estimated but other time-spans are also taken into account: 2, 3, 6, 9, and 18 years. An ergodic vector is obtained which points to an important degree of polarisation in the long-run.