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Tax decentralization and public deficits in OECD countries

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  • Baskaran, Thushyanthan

Abstract

This article explores the effect of sub-national tax autonomy and sub-national control over shared taxes on primary deficits with panel data for 23 OECD countries over the 1975-2000 period. The results suggest that sub-national tax autonomy has a U-shaped effect on primary deficits. We find that the “average” country in the sample could increase the fiscal stability of its public sector by reducing sub-national tax autonomy. There is also some indication that subnational control over shared taxes increases fiscal stability, but we obtain this result only if Belgium and Spain are included in the sample.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 35141.

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Date of creation: 2011
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Handle: RePEc:pra:mprapa:35141

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Keywords: Tax decentralization; Public deficits; Fiscal instability;

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Citations

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Cited by:
  1. Daniel Oto Peralías & Diego Romero-Ávila & Carlos Usabiaga, 2013. "Does fiscal decentralization mitigate the adverse effects of corruption on public deficit?," EcoMod2013, EcoMod 5690, EcoMod.
  2. Oto-Peralías, Daniel & Romero-Ávila, Diego & Usabiaga, Carlos, 2013. "Does fiscal decentralization mitigate the adverse effects of corruption on public deficits?," European Journal of Political Economy, Elsevier, Elsevier, vol. 32(C), pages 205-231.
  3. Andrea Filippo Presbitero & Agnese Sacchi & Alberto Zazzaro, 2014. "Property Tax and Fiscal Discipline in OECD Countries," Mo.Fi.R. Working Papers, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences 95, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
  4. Benjamin Larin & Bernd Süssmuth, 2014. "Fiscal Autonomy and Fiscal Sustainability: Subnational Taxation and Public Indebtedness in Contemporary Spain," CESifo Working Paper Series 4726, CESifo Group Munich.

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