Fiscal Competition, Decentralization, Leviathan, and Growth
AbstractThis paper studies the implications of different fiscal regimes (i.e. centralized vs decentralized) for economic growth and welfare by incorporating Wilson (2005)-type fiscal competition model into a Barro (1990)-type endogenous growth model. We show that fiscal decentralization is more desirable than fiscal centralization for economic growth, when the degree of selfishness of central government bureaucrats is high, and the relative political power of the young to the old is low. We also show that the growth-maximizing fiscal regime is also welfare-maximizing.
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Bibliographic InfoPaper provided by School of Economics, Kwansei Gakuin University in its series Discussion Paper Series with number 49.
Length: 26 pages
Date of creation: Nov 2009
Date of revision: Nov 2009
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Fiscal competition; Decentralization; Leviathan; Overlapping generations;
Find related papers by JEL classification:
- H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
- H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-12-19 (All new papers)
- NEP-DGE-2009-12-19 (Dynamic General Equilibrium)
- NEP-FDG-2009-12-19 (Financial Development & Growth)
- NEP-MIC-2009-12-19 (Microeconomics)
- NEP-PBE-2009-12-19 (Public Economics)
- NEP-PUB-2009-12-19 (Public Finance)
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