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Government Decentralization as a Commitment

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  • Mark Gradstein

Abstract

In the past several decades, many countries, among them non-democratic, chose to decentralize their governments. Building on insights provided by the “second generation” wave of research on fiscal federalism, this paper proposes a unified model to account for this. The idea is that decentralization serves as a commitment device to ensure that ex post chose policies will reflect regional preferences, thereby boosting individual productive effort incentives. This theory may explain the decentralization process in China in 1980-1990s, as well as the fact that government decentralization is generally more prevalent in democracies.

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  • Mark Gradstein, 2014. "Government Decentralization as a Commitment," CESifo Working Paper Series 4809, CESifo.
    • Handle: RePEc:ces:ceswps:_4809
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    More about this item

    Keywords

    federalism; regional decentralization; non-democracies;
    All these keywords.

    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General

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