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Fiscal Decentralization and Economic Growth in OECD Countries: Is there a Relationship?

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Author Info
Thushyanthan Baskaran ()
Lars P. Feld ()

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Abstract

We study the relationship between fiscal decentralization and economic growth for 23 OECD countries from 1975 to 2001 by using new panel data on sub-federal tax autonomy. While initial estimations suggest that fiscal decentralization causes lower growth rates, we find that this result is not robust to alternative specifications. We also fail to obtain evidence for a negative relationship in a number of additional robustness checks. We thus conclude that fiscal decentralization is unrelated to economic growth.

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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 2721.

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Date of creation: 2009
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Handle: RePEc:ces:ceswps:_2721

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Related research
Keywords: fiscal federalism; sub-national fiscal autonomy; tax competition;

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Find related papers by JEL classification:
D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation
H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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This page was last updated on 2009-11-3.

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