The Dual Logic of Intergovernmental Transfers: Presidents, Governors, and the Politics of Coalition-Building in Argentina

Abstract

How do fiscal institutions shape the ability of presidents and state governors in a federation to manipulate federal money with coalition building goals? This article proposes a two-level theory of intergovernmental transfers based upon variation in the level of discretionality over the use of federal money that fiscal institutions grant to national and subnational executives. We use subnational level data in Argentina to show that not taking discretionality into account leads to wrong inferences about the electoral returns of intergovernmental transfers. We find that presidents extract different political utility from discretionary and nondiscretionary transfers. While discretionary transfers enable them to directly target voters bypassing opposition provincial governors, nondiscretionary transfers pay off more to co-partisan governors by guaranteeing security in the reception of transfer monies.