New Evidence on Fiscal Decentralization and the Size of Government
AbstractThis paper adds to the literature by utilizing improved data on tax revenue decentralization to re-examine the relationship between fiscal decentralization and the size of government. An econometric analysis using panel data from 18 OECD countries shows that fiscal decentralization matters for both the size and composition of government spending. Tax revenue decentralization is associated with a smaller public sector, while expenditure decentralization is associated with a larger public sector. The former effect seems to be driven by a reduction in social security transfers, while the latter effect seems to be driven by increased government consumption.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1615.
Date of creation: 2005
Date of revision:
fiscal federalism; sub-central fiscal autonomy; government expenditures; size of government;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-12-20 (All new papers)
- NEP-PBE-2005-12-20 (Public Economics)
- NEP-URE-2005-12-20 (Urban & Real Estate Economics)
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