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Fiscal Decentralization and Public Sector Efficiency: Evidence from OECD Countries

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Author Info
Antonis Adam ()
Manthos D. Delis ()
Pantelis Kammas ()

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Abstract

This paper attempts to identify the effect of fiscal decentralization on public sector efficiency (PSE). We employ data envelopment analysis on a panel of 21 OECD countries over the period 1970-2000 to construct two alternative PSE indicators that reflect the governmental goals of economic performance and stability. In turn, using a novel technique that merges the methodologies of Simar and Wilson (2007) and Khan and Lewbel (2007), we regress the PSE scores obtained on an extensive set of alternative fiscal decentralization measures. Backed by strong empirical results, obtained from a number of different specifications, we contend that PSE is increasing with fiscal decentralization.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 2364.

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Date of creation: 2008
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Handle: RePEc:ces:ceswps:_2364

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Related research
Keywords: public sector efficiency; fiscal decentralization; semi-parametric models;

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Find related papers by JEL classification:
C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods
C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models
H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

References listed on IDEAS
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Paul Hallwood & Ronald MacDonald, 2008. "A Review of the Empirical Evidence on the Effects of Fiscal Decentralization on Economic Efficiency: With Comments on Tax Devolution to Scotland," Working papers 2008-46, University of Connecticut, Department of Economics. [Downloadable!]
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