On the link between fiscal decentralization and public debt in OECD countries
AbstractExcessive borrowing by subnational governments is considered to be one of the perils of fiscal decentralization. On the other hand, fiscal decentralization might ensure the scal stability of the public sector by constraining Leviathan governments. Since the impact of decentralized government on fiscal outcomes is therefore ambiguous from a theoretical perspective, we explore this question empirically with a panel of 17 OECD countries over the 1975-2001 period. Our findings suggest that expenditure decentralization signicantly reduces public indebtedness, whereas tax decentralization and vertical fiscal imbalances are insignicant.
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Bibliographic InfoArticle provided by Springer in its journal Public Choice.
Volume (Year): 145 (2010)
Issue (Month): 3 (December)
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Web page: http://www.springerlink.com/link.asp?id=100332
Fiscal decentralization; Public debt; Soft budget constraints; H71; H77; H30;
Other versions of this item:
- Baskaran, Thushyanthan, 2010. "On the Link Between Fiscal Decentralization and Public Debt in OECD Countries," MPRA Paper 21599, University Library of Munich, Germany.
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
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