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The Economic Case for Further Fiscal Decentralisation to Scotland: Theoretical and Empirical Perspectives

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  • David Bell
  • David Eiser

Abstract

This paper examines the background to calls for further fiscal decentralisation in Scotland in the light of theories of fiscal federalism. In particular, it examines whether spatial differences in preferences, which are central to ‘first generation’ theories of fiscal federalism can be argued to play a central role in the case for granting Scotland further tax and spending powers. ‘Second generation’ theories of fiscal federalism draw attention to the political economy of allocating tax powers to different levels of government. Some of the authors in this strand of theory argue that the case for allocating tax powers to subnational governments can be made in terms of ‘accountability’ – the notion that local politicians can be better held to account for the outcomes of policy actions. Our empirical analysis suggests that there is no clear difference in preferences between Scotland and the rest of the UK along a number of key political dimensions. However, the Scottish parliament enjoys substantially higher levels of trust among the Scottish electorate than does the UK parliament.

Suggested Citation

  • David Bell & David Eiser, 2015. "The Economic Case for Further Fiscal Decentralisation to Scotland: Theoretical and Empirical Perspectives," National Institute Economic Review, National Institute of Economic and Social Research, vol. 233(1), pages 27-36, August.
  • Handle: RePEc:sae:niesru:v:233:y:2015:i:1:p:r27-r36
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    Citations

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    Cited by:

    1. Tobias Emonts-Holley & Alastair Greig & Patrizio Lecca & Katerina Lisenkova & Peter G McGregor & J Kim Swales, 2017. "The impact of enhanced regional fiscal autonomy: towards a scandinavian movel for Scotland," Working Papers 1707, University of Strathclyde Business School, Department of Economics.
    2. Muscatelli, Anton & Roy, Graeme & Trew, Alex, 2022. "Persistent States: Lessons For Scottish Devolution And Independence," National Institute Economic Review, National Institute of Economic and Social Research, vol. 260, pages 51-63, May.
    3. Philip McCann, 2017. "Urban futures, population ageing and demographic decline," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 10(3), pages 543-557.

    More about this item

    Keywords

    fiscal decentralisation; fiscal federalism; preferences; identity; accountability; devolved powers;
    All these keywords.

    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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