Advanced Search
MyIDEAS: Login to save this article or follow this journal

Does Decentralization Reduce Government Size? A Quantitative Study of the Decentralization Hypothesis

Contents:

Author Info

  • Silika Prohl

    (Department of Economics, Swiss Banking Institute, University of Zurich, Zurich, Switzerland, prohl@isb.unizh.ch)

  • Friedrich Schneider

    (Department of Economics, Institute of Economic Policy, Johannes Kepler University of Linz, Linz Auhof, Austria)

Abstract

The ‘‘decentralization hypothesis’’ in the theory of fiscal federalism suggests that fiscal decentralization may have a dampening effect on government size, implying that government intrusion into the economy can be restricted if government responsibilities for taxes and expenditures are decentralized. We study the effect of decentralization on public sector growth for a panel of twenty-nine countries over the 1978—2003 period. The major purposes of this study are twofold. First, we examine the decentralization hypothesis using two different proxy variables of fiscal decentralization: a measure of expenditure and revenue decentralization based on government financial statistics and an index of fiscal federalism that incorporates the fiscal and administrative autonomy that constitutional and statutory law grants to subnational governments. Second, and relatedly, we also explore the hypothesis that direct democracy at the local level has a dampening effect on government growth.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://pfr.sagepub.com/content/37/6/639.abstract
Download Restriction: no

Bibliographic Info

Article provided by in its journal Public Finance Review.

Volume (Year): 37 (2009)
Issue (Month): 6 (November)
Pages: 639-664

as in new window
Handle: RePEc:sae:pubfin:v:37:y:2009:i:6:p:639-664

Contact details of provider:

Related research

Keywords: size of government; fiscal federalism; panel data analysis;

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

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

Cited by:
  1. Feld, Lars P., 2014. "James Buchanan's theory of federalism: From fiscal equity to the ideal political order," Freiburg Discussion Papers on Constitutional Economics 14/06, Walter Eucken Institut e.V..
  2. Jaroslaw Kantorowicz, 2014. "Judges as Fiscal Activists: Can Constitutional Review Shape Public Finance?," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 2, pages 79-104, June.
  3. Paolo Liberati & Agnese Sacchi, 2013. "Tax decentralization and local government size," Public Choice, Springer, Springer, vol. 157(1), pages 183-205, October.
  4. Jean-Paul Faguet & Fabio Sánchez, 2009. "Decentralization and Access to Social Services in Colombia," DOCUMENTOS CEDE, UNIVERSIDAD DE LOS ANDES-CEDE 005401, UNIVERSIDAD DE LOS ANDES-CEDE.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:sae:pubfin:v:37:y:2009:i:6:p:639-664. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (SAGE Publications).

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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