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Fiscal centralization: a remedy for corruption?

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  • Joan Rosselló Villalonga

    (University of the Balearic Islands)

Abstract

The empirical evidence on the relationship between political decentralization and corruption is far from clear. We develope a model that analizes the relationship between decentralization and corruption and show how cost–benefit calculations can lead public administrations to tolerate a certain degree of corruption. In the model economy, the centralized provision of public goods might be more efficient than their decentralized provision, but under very restrictive conditions. Decentralization, on the other hand, is more efficient where there exists heterogeneity across jurisdictions. In this scenario, the descentralized provision of public goods would be more efficient because regional governments would dedicate optimal amounts of funding to fighting corruption, while their centralized provision might lead to the over or under-allocation of resources.

Suggested Citation

  • Joan Rosselló Villalonga, 2018. "Fiscal centralization: a remedy for corruption?," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 9(4), pages 457-474, November.
    • Handle: RePEc:spr:series:v:9:y:2018:i:4:d:10.1007_s13209-018-0184-2
    DOI: 10.1007/s13209-018-0184-2
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    References listed on IDEAS

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    Cited by:

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    2. Miguel Ángel Borrella-Mas & Martin Rode, 2021. "Love is blind: partisan alignment and political corruption in Spain," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 12(3), pages 423-451, September.

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    More about this item

    Keywords

    Corruption; Fiscal decentralization; Public workers;
    All these keywords.

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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