Developing Composite Indicators for Fiscal Decentralization: Which Is The Best Measure For Whom?
AbstractThe right way to measure the degree and extent of the different aspects of fiscal decentralization has been a long-debated, yet underdeveloped issue. There has been little consensus on the right approach to developing a single indicator which is sometimes needed to show a general trend in fiscal decentralization and reveal relationship to other variables in empirical studies. In particular, several composite indicators of fiscal decentralization have been proposed, but there are very few attempts to evaluate and compare these measures in terms of implicit biases and different weights between revenue and expenditure decentralization. Critically reviewing and comparing various types of fiscal-relation indicators in a systematic way, this paper proposes two criteria to classify similar-looking composite indicators for fiscal decentralization while it also presents two new composite measures. The new fiscal decentralization indicators are symmetric in terms of the relative effects of revenue and expenditure decentralization on the value of the composite indicators at the same time that they are weighted for/against fiscal gaps and imbalances. It is argued that different composite indicators reflect different perspectives on which aspect of fiscal decentralization is more important and whether a growing fiscal gap means less fiscal decentralization or not.
Download InfoIf 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.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 43032.
Date of creation: 28 Nov 2012
Date of revision:
fiscal federalism; fiscal decentralization; decentralization measurement;
Find related papers by JEL classification:
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
- H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
This paper has been announced in the following NEP Reports:
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.:
- Roy Bahl & Sally Wallace, 2004. "Intergovernmental Transfers: The Vertical Sharing Dimension," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0419, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
- Luc Eyraud & Anita Tuladhar & Julio Escolano & Marialuz Moreno Badia & Juliane Sarnes, 2012. "Fiscal Performance, Institutional Design and Decentralization in European Union Countries," IMF Working Papers 12/45, International Monetary Fund.
- Baskaran, Thushyanthan, 2010.
"On the Link Between Fiscal Decentralization and Public Debt in OECD Countries,"
21599, University Library of Munich, Germany.
- Thushyanthan Baskaran, 2010. "On the link between fiscal decentralization and public debt in OECD countries," Public Choice, Springer, vol. 145(3), pages 351-378, December.
- Akai, Nobuo & Sakata, Masayo, 2002. "Fiscal decentralization contributes to economic growth: evidence from state-level cross-section data for the United States," Journal of Urban Economics, Elsevier, vol. 52(1), pages 93-108, July.
- Dan Stegarescu, 2005. "Public sector decentralisation: measurement concepts and recent international trends," Fiscal Studies, Institute for Fiscal Studies, vol. 26(3), pages 301-333, September.
- Jorge Martinez-Vazquez & Andrey Timofeev, 2009. "Decentralization Measures Revisited," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0913, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
- Richard M. Bird, 2012. "Are There Trends in Local Finance? A Comparative Look at Data and Normative Models of Local Government Finance," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1205, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
- Jin, Jing & Zou, Heng-fu, 2002.
"How does fiscal decentralization affect aggregate, national, and subnational government size?,"
Journal of Urban Economics,
Elsevier, vol. 52(2), pages 270-293, September.
- Jing Jin & Heng-fu Zou, 2000. "How does fiscal decentralization affect aggregate, national, and subnational government size?," CEMA Working Papers 72, China Economics and Management Academy, Central University of Finance and Economics.
- Dan Stegarescu, 2009. "The effects of economic and political integration on fiscal decentralization: evidence from OECD countries," Canadian Journal of Economics, Canadian Economics Association, vol. 42(2), pages 694-718, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.