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Fiscal decentralization and deficits: International evidence

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  • Neyapti, Bilin

Abstract

This paper investigates macroeconomic effects of fiscal decentralization, which has been a neglected area of research. Panel evidence for 16 countries over 1980-1998 indicates that expenditure and revenue decentralization reduce budget deficits. A principal finding is that the fiscal disciplining effect of fiscal decentralization increases with population size. Interestingly, absence of local elections is associated with greater effectiveness of fiscal decentralization. The benefits of expenditure decentralization decrease with ethnolinguistic fractionalization and quality of governance.

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Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 26 (2010)
Issue (Month): 2 (June)
Pages: 155-166

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Handle: RePEc:eee:poleco:v:26:y:2010:i:2:p:155-166

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Web page: http://www.elsevier.com/locate/inca/505544

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Keywords: Fiscal decentralization Budget deficits;

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Citations

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Cited by:
  1. Furceri, Davide & Sacchi, Agnese & Salotti, Simone, 2014. "Can fiscal decentralization alleviate government consumption volatility?," MPRA Paper 54513, University Library of Munich, Germany.
  2. Thushyanthan Baskaran, 2012. "Tax Decentralization and Public Deficits in OECD Countries," Publius: The Journal of Federalism, Oxford University Press, vol. 42(4), pages 688-707, October.
  3. Baskaran, Thushyanthan, 2011. "Fiscal decentralization, ideology, and the size of the public sector," European Journal of Political Economy, Elsevier, vol. 27(3), pages 485-506, September.
  4. Shun-ichiro Bessho & Kimiko Terai, 2013. "Fiscal restraints by advisors," Economics of Governance, Springer, vol. 14(3), pages 205-232, August.
  5. Bilin Neyapti, 2005. "Equalization via Fiscal Decentralization," Working Papers 2005/11, Turkish Economic Association.
  6. Neyapti, Bilin, 2006. "Revenue decentralization and income distribution," Economics Letters, Elsevier, vol. 92(3), pages 409-416, September.
  7. Eichler, Stefan & Hofmann, Michael, 2013. "Sovereign default risk and decentralization: Evidence for emerging markets," European Journal of Political Economy, Elsevier, vol. 32(C), pages 113-134.
  8. Bilin Neyapti & Zafer Akin & Zeynep B. Cevik, 2011. "Does Fiscal Decentralization Promote Fiscal Discipline?," Departmental Working Papers 1101, Bilkent University, Department of Economics.
  9. Oto-Peralías, Daniel & Romero-Ávila, Diego & Usabiaga, Carlos, 2013. "Does fiscal decentralization mitigate the adverse effects of corruption on public deficits?," European Journal of Political Economy, Elsevier, vol. 32(C), pages 205-231.
  10. Nuta Alina Cristina & Nuta Florian Marcel, 2013. "Analiza Relatiei Dintre Descentralizarea Fiscala Si Cresterea Economica In Romania," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 2, pages 204-209, April.
  11. Sorribas-Navarro, Pilar, 2011. "Bailouts in a fiscal federal system: Evidence from Spain," European Journal of Political Economy, Elsevier, vol. 27(1), pages 154-170, March.
  12. Iqbal, Nasir & Nawaz, Saima, 2010. "Fiscal Decentralization and Macroeconomic Stability: Theory and Evidence from Pakistan," MPRA Paper 27184, University Library of Munich, Germany.
  13. Andrea Filippo Presbitero & Agnese Sacchi & Alberto Zazzaro, 2014. "Property Tax and Fiscal Discipline in OECD Countries," Mo.Fi.R. Working Papers 95, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
  14. Arif Wismadi & Mark Zuidgeest & Mark Brussel & Martin Maarseveen, 2014. "Spatial Preference Modelling for equitable infrastructure provision: an application of Sen’s Capability Approach," Journal of Geographical Systems, Springer, vol. 16(1), pages 19-48, January.
  15. Neyapti, Bilin, 2013. "Fiscal decentralization, fiscal rules and fiscal discipline," Economics Letters, Elsevier, vol. 121(3), pages 528-532.
  16. Hasan, Syed Akif & Subhani, Muhammad Imtiaz & Osman, Ms. Amber, 2012. "Fiscal Deficit cannot be reduced by increasing Taxes (A point to ponder from Pakistan)," MPRA Paper 35681, University Library of Munich, Germany.
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