Advanced Search
MyIDEAS: Login to save this paper or follow this series

Partial Fiscal Decentralization and Public-Sector Heterogeneity: Theory and Evidence from Norway

Contents:

Author Info

  • Lars-Erik Borge
  • Jan K. Brueckner
  • Jorn Rattso

Abstract

This paper provides an empirical test of a principal tenet of fiscal federalism: that spending discretion, when granted to localities, leads to public-sector heterogeneity, with public-good levels adjusting to suit local demands. The test is based on a simple model of partial fiscal decentralization, under which earmarking of central transfers for particular uses is eliminated, allowing funds to be spent according to local tastes. The model predicts that partial decen- tralization generates dispersion in the levels of public services as spending adjusts to local preferences. But the model also yields the more-general prediction that the characteristics of local jurisdictions should play a bigger role in determining the levels of public goods after a decentralization reform than before. Both predictions are confirmed by the paper’s empirical results, which show the effects of the 1986 Norwegian reform.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2012/wp-cesifo-2012-10/cesifo1_wp3954.pdf
Download Restriction: no

Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3954.

as in new window
Length:
Date of creation: 2012
Date of revision:
Handle: RePEc:ces:ceswps:_3954

Contact details of provider:
Postal: Poschingerstrasse 5, 81679 Munich
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Email:
Web page: http://www.cesifo.de
More information through EDIRC

Related research

Keywords:

Find related papers by JEL classification:

References

References listed on IDEAS
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.:
as in new window
  1. Patrick J. Bayer & Christopher D. Timmins, 2004. "Estimating Equilibrium Models of Sorting Across Locations," Yale School of Management Working Papers, Yale School of Management ysm415, Yale School of Management.
  2. Borge, Lars-Erik & Rattso, Jorn, 1995. "Demographic shift, relative costs and the allocation of local public consumption in Norway," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 25(6), pages 705-726, December.
  3. Eberts, Randall W. & Gronberg, Timothy J., 1981. "Jurisdictional homogeneity and the Tiebout hypothesis," Journal of Urban Economics, Elsevier, vol. 10(2), pages 227-239, September.
  4. Zhuravskaya Ekatherina, 2000. "Incentives to Provide Local Public Goods: Fiscal Federalism, Russian Style," EERC Working Paper Series 99-15e, EERC Research Network, Russia and CIS.
  5. Mario Jametti & Marcelin Joanis, 2011. "Electoral Competition as a Determinant of Fiscal Decentralization," CESifo Working Paper Series 3574, CESifo Group Munich.
  6. Panizza, Ugo, 1999. "On the determinants of fiscal centralization: Theory and evidence," Journal of Public Economics, Elsevier, Elsevier, vol. 74(1), pages 97-139, October.
  7. Hilary Sigman, 2007. "Decentralization and Environmental Quality: An International Analysis of Water Pollution," NBER Working Papers 13098, National Bureau of Economic Research, Inc.
  8. Paul W. Rhode & Koleman S. Strumpf, 2003. "Assessing the Importance of Tiebout Sorting: Local Heterogeneity from 1850 to 1990," American Economic Review, American Economic Association, American Economic Association, vol. 93(5), pages 1648-1677, December.
  9. Lars-Erik Borge & Jørn Rattsø, 2002. "Spending Growth With Vertical Fiscal Imbalance: Decentralized Government Spending In Norway, 1880-1990," Economics and Politics, Wiley Blackwell, Wiley Blackwell, vol. 14(3), pages 351-373, November.
  10. H. Spencer Banzhaf & Randall P. Walsh, 2008. "Do People Vote with Their Feet? An Empirical Test of Tiebout," American Economic Review, American Economic Association, American Economic Association, vol. 98(3), pages 843-63, June.
  11. Robert Schwager, 1999. "Administrative Federalism and a Central Government with Regionally Based Preferences," International Tax and Public Finance, Springer, Springer, vol. 6(2), pages 165-189, May.
  12. Faguet, Jean-Paul, 2004. "Does decentralization increase government responsiveness to local needs?: Evidence from Bolivia," Journal of Public Economics, Elsevier, Elsevier, vol. 88(3-4), pages 867-893, March.
  13. Arzaghi, Mohammad & Henderson, J. Vernon, 2005. "Why countries are fiscally decentralizing," Journal of Public Economics, Elsevier, Elsevier, vol. 89(7), pages 1157-1189, July.
  14. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 64, pages 416.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_3954. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.