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Decentralization and Regional Government Size: an Application to the Spanish Case

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Author Info

  • Patricio Perez

    (University of Cantabria)

  • David Cantarero

    () (University of Cantabria)

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    Abstract

    This paper studies the impact of decentralization on the size of regional governments in Spain controlling for economies of scale, interregional heterogeneity and institutional framework, and successfully tests some implications of the model. Firstly, it supports the classic public goods theory of a trade-off-between the economic benefits of size and the costs of heterogeneity. Secondly, it rejects the “Leviathan” hypothesis because of vertical power imbalance and lack of fiscal competition among regions. Thirdly, the paper argues that government size is mediated by financial resources obtained through intergovernmental grants, consistent with welfare economics and positive economic politics.

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    File URL: http://aysps.gsu.edu/isp/files/ispwp1032.pdf
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    Bibliographic Info

    Paper provided by International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University in its series International Center for Public Policy Working Paper Series, at AYSPS, GSU with number paper1032.

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    Length: 28 pages
    Date of creation: 01 Nov 2010
    Date of revision:
    Handle: RePEc:ays:ispwps:paper1032

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    Related research

    Keywords: government size; fiscal decentralization; leviathan hypothesis; vertical imbalances; flypaper effect.;

    This paper has been announced in the following NEP Reports:

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    1. Angel de la Fuente & Rafael Doménech, 2006. "Human Capital in Growth Regressions: How Much Difference Does Data Quality Make?," Journal of the European Economic Association, MIT Press, vol. 4(1), pages 1-36, 03.
    2. repec:sae:pubfin:v:36:y:2008:i:2:p:194-218 is not listed on IDEAS
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