* 1990 GDP 40 JEL Classification: H39, H54, H63, H72, H77 Key words: * 16 (2005a, b) 1
Local Government Bonds and Fiscal Discipline By Takero Doi, Tomoko Hayashi and Nobuyuki Suzuki Abstract Outstanding of local government bonds in Japan has increased rapidly after the 1990s, and now reached the highest level. It is important to reduce and manage not only the outstanding amount of national government bonds but also local government bonds. We observe that the management system of local government bonds in advanced countries have recently changed due to decentralization and accumulated government debt. This paper compares the fiscal disciplines of local governments in various countries, and discusses the characteristics of local government bond systems in the United States, France, Canada, and Sweden studied through local survey. As the suggestion in Japan, some points are clarified from the international comparison. In many countries except Japan, local governments face discipline through market mechanism in the market of local government bond. Various actors such as investors and banks in the market support the fiscal discipline. Furthermore, some fiscal rules also play an important role for reduction of local government debt. JEL Classification: H39, H54, H63, H72, H77 Key words: local government bond, fiscal police rule, fiscal discipline 2
1990 200 3 GDP 40 13 10 18 I II III IV 1 1 (2005b) 3
V 1990 2 IMF Ter-Minassian1997 20 13 20 OECD Joumard2002 2 II 4
Dafflon2002Concil of Europe 2002Dafflon (2002) 10 Concil of Europe2002 27 Ter-Minassian (1997)(1)(2) (3)(4) 4 I1 (1) (2) (3) (4) 53 I2 3 4 3 Ter-minassian (1997) 1980 5
(1) (2) (3) (1)(2) (4) Ter-Minassian/IMF (1997) Jouamard2002 Rattso2002-6
Ter-minassian/IMF(1997) Treasury Decentralization Law Budget laws 25 (1)(2) 2 National Loan Council Ministry of Finance 1989 High Finance Council Ministry of Interior Minister of the Environment Municipalities Act Ministry of Finance Ministry of Finance Ministry of Finance Autonomous Communities 7
i ii Ter-minassian (1997) (1) (2) (3) (4) i 8
ii (1) (2) (3) (4) 4 4 (1) MSRBMunicipal Securities Rulemaking Board GFOAGovernment Financial Officers Association (2) (3) (4) (3) (4) 1990 9
i National Loan council ii 10
G7 GDP I3 GDP 100 4 90 2002 GDP 5 90 Sachverstandigenrat DGCLLes Collectivités locales en chiffres US Census BureauStastical Abstract of the United States SCBStatistics Sweden IMF Government Finance Statistics 11
I4 90 Sachverstandigenrat DGCLLes Collectivités locales en chiffresus Census BureauStastical Abstract of the United StatesSCBStatistics Sweden IMFGovernment Finance Statistics 12
11.5 3 13 15 12 2002 3 3 2000 1 3 2002 10 2002 15 18 6 2000 13 2000 13 10 2002 13
I6 18 2004 1982 ( 260 ) 90 3 Ch.9 14
3 1 Dexia Credit Local 5 10 5 1 15
4 18 2002 9 2 1999 9 80 DexiaCredit Agricol 15 5 1998 15 18 1 1998 4 4 bond bank 16
Council of Europe (2002)5 I9 5 2 A. 5 B. 22 27 Council of Europe(2002), Recovery of Local and Regional Authorities in Financial Difficulties II 2006 5% 20% 5 5 17
90% 3 20% 6 2006 [ ][] 30% 10% 50% 10% II1 (2001)Doi (2002)(1986) (1986)6061 (1986)61 6 2006 18
2002 3 7 16 12 2002 27 27 2003 II2 7 19
2002 4 27 9 20
8 9 5 20 (2004) 8 (2000)(2003) 9 (2005a, b) 21
(primary balance) (2004) III 10 III1 2000 1 4500 1980 90 III2 (bond bank) 10 Poterba and Rueben (1999) 22
US Census Bureau, Statistical Abstract of the United States Moody s S&P Fitch GFOA) SEC MSRB NASD U.S. Census Bureau 23
III3 2000 35.0 68.7 1,000 U.S. Census Bureau tax exempt municipal bonds Internal Revenue ServiceIRS PPP 24
III-4 2002 187 3,113 Alternative Minimum Tax Thomson Financial Securities Data Company SEC Municipal Securities Rulemaking Board: MSRB National Association of Securities Dealers: NASD 3 SEC 25
MSRB 1975 MSRB SEC MSRB SEC NASD MSRB SEC NASD SEC MSRB (Federal Reserve Board) (Federal Deposit Insurance Corporation) OCC (Office of the Comptroller of the Currency) Moody s 1918 S&P 1940 1930 1970 1974 A Moody s AaaAaABaaBaBCaaCaC Moody s 30 S&P 27 26
Moody s 66.9 Aaa15.6 Aa 62.6 Aaa13.9% Aa Baa III5 10 10 1970 2000 (TBMA)1980 463 2.51999 2268 46 mono line 27
9 9 9 1930 1934 9 1976 creature 9 9 9 9 9 1975 28
1 2 3 4 14 6 6 3 21 1820 1960 1984 31 1994 III7 1980 1994 1,333 1.02 29
1940-49 79 40,907 0.19% 1950-59 112 74,592 0.15% 1960-69 294 79,941 0.37% 1970-79 202 77,620 0.26% 1980-94 1,333 130,092 1.02% 2,020 403,152 0.50% TBMA 30
IR 9 31
IV 2002 7328 1041 GDP 2001 452002 48.2 GDP 8.2 6.8 45 16 32