IDEAS home Printed from https://ideas.repec.org/a/aes/amfeco/v23y2021i56p206.html
   My bibliography  Save this article

On the Determinants of Fiscal Decentralization: Evidence From the EU

Author

Listed:
  • Francisco J. Delgado

    (University of Oviedo and GEN, Spain)

Abstract

We empirically analyze the determinants of the fiscal decentralization in the European Union. Our approach consists on a quantile regression for the period 2005-2017. The results show the differences in the impact of explanatory variables on the fiscal decentralization by quantiles. Specifically, while GDP per capita or corruption are not significant in a linear modelling, both are relevant in the quantile approach with different effects along the distribution of fiscal decentralization. And other variables as population, density or inequality do not have neither the same impact among quantiles, denoting the limitations of using linear approaches for complex issues as fiscal decentralization.

Suggested Citation

  • Francisco J. Delgado, 2021. "On the Determinants of Fiscal Decentralization: Evidence From the EU," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 23(56), pages 206-206, February.
    • Handle: RePEc:aes:amfeco:v:23:y:2021:i:56:p:206
    as

    Download full text from publisher

    File URL: http://www.amfiteatrueconomic.ro/temp/Article_2988.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bellofatto, Antonio Andrés & Besfamille, Martín, 2018. "Regional state capacity and the optimal degree of fiscal decentralization," Journal of Public Economics, Elsevier, vol. 159(C), pages 225-243.
    2. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
    3. Jorge Martinez-Vazquez & Santiago Lago-Peñas & Agnese Sacchi, 2017. "The Impact Of Fiscal Decentralization: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 31(4), pages 1095-1129, September.
    4. Yongzheng Liu & Jorge Martinez-Vazquez & Alfred M. Wu, 2017. "Fiscal decentralization, equalization, and intra-provincial inequality in China," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(2), pages 248-281, April.
    5. Besley, Timothy & Coate, Stephen, 2003. "Centralized versus decentralized provision of local public goods: a political economy approach," Journal of Public Economics, Elsevier, vol. 87(12), pages 2611-2637, December.
    6. G. Gulsun Arikan, 2004. "Fiscal Decentralization: A Remedy for Corruption?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(2), pages 175-195, March.
    7. Cristian F Sepulveda & Jorge Martinez-Vazquez, 2011. "The Consequences of Fiscal Decentralization on Poverty and Income Equality," Environment and Planning C, , vol. 29(2), pages 321-343, April.
    8. Lessmann, Christian & Markwardt, Gunther, 2010. "One Size Fits All? Decentralization, Corruption, and the Monitoring of Bureaucrats," World Development, Elsevier, vol. 38(4), pages 631-646, April.
    9. Maria Rosaria Alfano & Anna Laura Baraldi & Claudia Cantabene, 2019. "The Effect of Fiscal Decentralization on Corruption: A Non‐linear Hypothesis," German Economic Review, Verein für Socialpolitik, vol. 20(1), pages 105-128, February.
    10. Roger Koenker, 2017. "Quantile Regression: 40 Years On," Annual Review of Economics, Annual Reviews, vol. 9(1), pages 155-176, September.
    11. Aurélie Cassette & Sonia Paty, 2010. "Fiscal decentralization and the size of government: a European country empirical analysis," Public Choice, Springer, vol. 143(1), pages 173-189, April.
    12. Antonis Adam & Manthos Delis & Pantelis Kammas, 2014. "Fiscal decentralization and public sector efficiency: evidence from OECD countries," Economics of Governance, Springer, vol. 15(1), pages 17-49, February.
    13. Wu, Alfred M. & Wang, Wen, 2013. "Determinants of Expenditure Decentralization: Evidence from China," World Development, Elsevier, vol. 46(C), pages 176-184.
    14. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
    15. Panizza, Ugo, 1999. "On the determinants of fiscal centralization: Theory and evidence," Journal of Public Economics, Elsevier, vol. 74(1), pages 97-139, October.
    16. Shiming Yang, 2019. "Fiscal Decentralization or Centralization: Diverging Paths of Chinese Cities," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 27(3), pages 102-125, May.
    17. Gustavo Canavire-Bacarreza & Jorge Martinez-Vazquez & Bauyrzhan Yedgenov, 2017. "Reexamining the determinants of fiscal decentralization: what is the role of geography?," Journal of Economic Geography, Oxford University Press, vol. 17(6), pages 1209-1249.
    18. Cerniglia, Floriana, 2003. "Decentralization in the public sector: quantitative aspects in federal and unitary countries," Journal of Policy Modeling, Elsevier, vol. 25(8), pages 749-776, November.
    19. Philip Bodman & Andrew Hodge, 2010. "What Drives Fiscal Decentralisation? Further Assessing the Role of Income," Fiscal Studies, Institute for Fiscal Studies, vol. 31(3), pages 373-404, September.
    20. Martinez-Vazquez, Jorge & McNab, Robert M., 2003. "Fiscal Decentralization and Economic Growth," World Development, Elsevier, vol. 31(9), pages 1597-1616, September.
    21. Canavire-Bacarreza, Gustavo & Martinez-Vazquez, Jorge & Yedgenov, Bauyrzhan, 2020. "Identifying and disentangling the impact of fiscal decentralization on economic growth," World Development, Elsevier, vol. 127(C).
    22. Janeba, Eckhard & Wilson, John Douglas, 2011. "Optimal fiscal federalism in the presence of tax competition," Journal of Public Economics, Elsevier, vol. 95(11), pages 1302-1311.
    23. Mullen, John K, 1980. "The Role of Income in Explaining State-Local Fiscal Decentralization," Public Finance = Finances publiques, , vol. 35(2), pages 300-308.
    24. Barbara Ermini & Raffaella Santolini, 2014. "Does Globalization Matter on Fiscal Decentralization? New Evidence from the OECD," Global Economic Review, Taylor & Francis Journals, vol. 43(2), pages 153-183, June.
    25. Jorge Martinez-Vazquez & Andrey Timofeev, 2009. "Decentralization Measures Revisited," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0913, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    26. Motohiro Sato & Shinji Yamashige, 2005. "Decentralization and Economic Development: An Evolutionary Approach," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 7(3), pages 497-520, August.
    27. Jan K. Brueckner, 2004. "Fiscal Decentralization with Distortionary Taxation: Tiebout vs. Tax Competition," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(2), pages 133-153, March.
    28. Andreas P. Kyriacou & Leonel Muinelo-Gallo & Oriol Roca-Sagalés, 2017. "Regional inequalities, fiscal decentralization and government quality," Regional Studies, Taylor & Francis Journals, vol. 51(6), pages 945-957, June.
    29. Agnese Sacchi & Simone Salotti, 2014. "The Effects of Fiscal Decentralization on Household Income Inequality: Some Empirical Evidence," Spatial Economic Analysis, Taylor & Francis Journals, vol. 9(2), pages 202-222, June.
    30. George R. Zodrow & Peter Mieszkowski, 2019. "Pigou, Tiebout, Property Taxation, and the Underprovision of Local Public Goods," World Scientific Book Chapters, in: George R Zodrow (ed.), TAXATION IN THEORY AND PRACTICE Selected Essays of George R. Zodrow, chapter 17, pages 525-542, World Scientific Publishing Co. Pte. Ltd..
    31. Moshe Buchinsky, 1998. "Recent Advances in Quantile Regression Models: A Practical Guideline for Empirical Research," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 88-126.
    32. R W Bahl & S Nath, 1986. "Public Expenditure Decentralization in Developing Countries," Environment and Planning C, , vol. 4(4), pages 405-418, December.
    33. Aslim, Erkmen Giray & Neyapti, Bilin, 2017. "Optimal fiscal decentralization: Redistribution and welfare implications," Economic Modelling, Elsevier, vol. 61(C), pages 224-234.
    34. Chu, Angus C. & Yang, C.C., 2012. "Fiscal centralization versus decentralization: Growth and welfare effects of spillovers, Leviathan taxation, and capital mobility," Journal of Urban Economics, Elsevier, vol. 71(2), pages 177-188.
    35. Thushyanthan Baskaran & Lars P. Feld, 2013. "Fiscal Decentralization and Economic Growth in OECD Countries," Public Finance Review, , vol. 41(4), pages 421-445, July.
    36. Roger Koenker, 2017. "Quantile regression 40 years on," CeMMAP working papers CWP36/17, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    37. Brueckner, Jan K., 2006. "Fiscal federalism and economic growth," Journal of Public Economics, Elsevier, vol. 90(10-11), pages 2107-2120, November.
    38. Arzaghi, Mohammad & Henderson, J. Vernon, 2005. "Why countries are fiscally decentralizing," Journal of Public Economics, Elsevier, vol. 89(7), pages 1157-1189, July.
    39. Jorge Martinez-Vazquez & Ming-Hung Yao, 2009. "Fiscal Decentralization and Public Sector Employment: A Cross-Country Analysis," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0903, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    40. Charles Wyplosz, 2015. "The Centralization-Decentralization Issue," European Economy - Discussion Papers 014, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    41. Dan Stegarescu, 2005. "Public sector decentralisation: measurement concepts and recent international trends," Fiscal Studies, Institute for Fiscal Studies, vol. 26(3), pages 301-333, September.
    42. Cheng, Shulei & Fan, Wei & Chen, Jiandong & Meng, Fanxin & Liu, Gengyuan & Song, Malin & Yang, Zhifeng, 2020. "The impact of fiscal decentralization on CO2 emissions in China," Energy, Elsevier, vol. 192(C).
    43. Roger Koenker & Kevin F. Hallock, 2001. "Quantile Regression," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 143-156, Fall.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Francisco J. Delgado & Maria J. Presno, 2023. "Evolution of Fiscal Decentralisation in OECD Countries: A Club Convergence Analysis," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 25(63), pages 558-558, April.
    2. Maria Cadaval Sampedro & Ana Herrero Alcalde & Santiago Lago-Peñas & Jorge Martinez-Vazquez, 2022. "Extreme events and the resilience of decentralized governance," Working Papers. Collection A: Public economics, governance and decentralization 2212, Universidade de Vigo, GEN - Governance and Economics research Network.
    3. Bruno Emmanuel ONGO NKOA & Derick Ulrich YOUNDA, 2022. "L’urbanisation accroît-elle l’assiette fiscale locale dans un contexte de décentralisation en Afrique subsaharienne ?," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 55, pages 93-111.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jorge Martinez-Vazquez & Santiago Lago-Peñas & Agnese Sacchi, 2017. "The Impact Of Fiscal Decentralization: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 31(4), pages 1095-1129, September.
    2. Reingewertz, Yaniv, 2014. "Fiscal Decentralization - a Survey of the Empirical Literature," MPRA Paper 59889, University Library of Munich, Germany.
    3. Choudhury, Atrayee & Sahu, Sohini, 2023. "Reconciling the mixed evidence in the fiscal decentralization-government size nexus using panel quantile regression," Economic Modelling, Elsevier, vol. 125(C).
    4. Francisco J. Delgado & Maria J. Presno, 2023. "Evolution of Fiscal Decentralisation in OECD Countries: A Club Convergence Analysis," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 25(63), pages 558-558, April.
    5. Gustavo Canavire-Bacarreza & Jorge Martinez-Vazquez & Bauyrzhan Yedgenov, 2017. "Reexamining the determinants of fiscal decentralization: what is the role of geography?," Journal of Economic Geography, Oxford University Press, vol. 17(6), pages 1209-1249.
    6. Milan Jílek, 2015. "Factors of Tax Decentralization in OECD-Europe Countries," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2015(2), pages 33-49.
    7. Choudhury, Atrayee & Sahu, Sohini, 2022. "Revisiting the nexus between fiscal decentralization and government size - The role of ethnic fragmentation," European Journal of Political Economy, Elsevier, vol. 75(C).
    8. Canavire-Bacarreza, Gustavo & Martinez-Vazquez, Jorge & Yedgenov, Bauyrzhan, 2020. "Identifying and disentangling the impact of fiscal decentralization on economic growth," World Development, Elsevier, vol. 127(C).
    9. Qiao, Mo & Ding, Siying & Liu, Yongzheng, 2019. "Fiscal decentralization and government size: The role of democracy," European Journal of Political Economy, Elsevier, vol. 59(C), pages 316-330.
    10. Armey, Laura E. & McNab, Robert M., 2018. "Expenditure decentralization and natural resources," The Quarterly Review of Economics and Finance, Elsevier, vol. 70(C), pages 52-61.
    11. Bartolini, David & Ninka, Eniel & Santolini, Raffaella, 2017. "Tax Decentralisation, Labour productivity and Employment," MPRA Paper 81070, University Library of Munich, Germany.
    12. Bellofatto, Antonio Andrés & Besfamille, Martín, 2021. "Tax decentralization notwithstanding regional disparities," Journal of Urban Economics, Elsevier, vol. 123(C).
    13. Furceri, Davide & Sacchi, Agnese & Salotti, Simone, 2014. "Can fiscal decentralization alleviate government consumption volatility?," MPRA Paper 54513, University Library of Munich, Germany.
    14. Tristan Canare, 2022. "Decentralization and welfare: Evidence from a panel of countries," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 93(3), pages 767-796, September.
    15. Bruno Emmanuel ONGO NKOA & Derick Ulrich YOUNDA, 2022. "L’urbanisation accroît-elle l’assiette fiscale locale dans un contexte de décentralisation en Afrique subsaharienne ?," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 55, pages 93-111.
    16. Agnese Sacchi & Simone Salotti, 2016. "A Comprehensive Analysis of Expenditure Decentralization and of the Composition of Local Public Spending," Regional Studies, Taylor & Francis Journals, vol. 50(1), pages 93-109, January.
    17. Sacchi, Agnese & Salotti, Simone, 2014. "The asymmetric nature of fiscal decentralization: theory and practice," MPRA Paper 54506, University Library of Munich, Germany.
    18. Libman, Alexander Mikhailovich, 2009. "Эндогенные Границы И Распределение Власти В Федерациях И Международных Сообществах [ENDOGENOUS BOUNDARIES AND DISTRIBUTION OF POWER In the Federation]," MPRA Paper 16473, University Library of Munich, Germany.
    19. Pietrovito, Filomena & Pozzolo, Alberto Franco & Resce, Giuliano & Scialà, Antonio, 2023. "Fiscal decentralization and income (re)distribution in OECD countries’ regions," Structural Change and Economic Dynamics, Elsevier, vol. 67(C), pages 69-81.
    20. Umaima Arif & Eatzaz Ahmad, 2018. "A Framework For Analyzing The Impact Of Fiscal Decentralization On Macroeconomic Performance, Governance And Economic Growth," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 65(01), pages 3-39, May.

    More about this item

    Keywords

    fiscal decentralization; federalism; European Union; quantile regression.;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aes:amfeco:v:23:y:2021:i:56:p:206. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Valentin Dumitru (email available below). General contact details of provider: https://edirc.repec.org/data/aseeero.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.