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

Author

Listed:
  • Patricio Perez

    (University of Cantabria)

  • David Cantarero

    (University of Cantabria)

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.

Suggested Citation

  • Patricio Perez & David Cantarero, 2010. "Decentralization and Regional Government Size: an Application to the Spanish Case," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1032, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    • Handle: RePEc:ays:ispwps:paper1032
    as

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    File URL: http://icepp.gsu.edu/files/2015/03/ispwp1032.pdf
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    References listed on IDEAS

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    3. Castells, Antoni & Sole-Olle, Albert, 2005. "The regional allocation of infrastructure investment: The role of equity, efficiency and political factors," European Economic Review, Elsevier, vol. 49(5), pages 1165-1205, July.
    4. Josep Lluís Carrion-i-Silvestre & Marta Espasa & Toni Mora, 2008. "Fiscal Decentralization and Economic Growth in Spain," Public Finance Review, , vol. 36(2), pages 194-218, March.
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    More about this item

    Keywords

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