Effect of Decentralization Strategy on Macroeconomic Stability in Thailand

Examines how the Thai central gov't. (TCG) can finance decentralization & make local gov'ts. (LG) accountable for their own finances. The TCG medium-term fiscal stance is not conducive to planned fiscal decentralization, & LG will not assume responsibility for providing public services previously provided by the TCG. This study proposes that the TCG must increase the value added tax rate over. Thailand has adopted an unbalanced approach to fiscal decent'n. LG are guaranteed rev. from transfers from the CG but need not assume increased respon'y. for providing public serv. This encourages LG to spend irresponsibly in expectation of bailouts by the TCG. This study recommends that the TCG impose budget constraints on LG.Lao-Araya, Kanokpan is the author of 'Effect of Decentralization Strategy on Macroeconomic Stability in Thailand', published 2003 under ISBN 9780756735326 and ISBN 0756735327.