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Fiscal Decentralization: A Political Economy Perspective

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Author Info
Lockwood, Ben (University of Warwick and CEPR)

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Abstract

This paper surveys recent contributions to the study of fiscal decentralization which adopt a political economy approach. It is argued that this approach can capture, in a variety of formal models, the plausible and influential ideas (increasingly, supported by empirical evidence) that fiscal decentralization can lead to improved preference-matching and accountability of government. In particular, recent work on centralized provision of public good provision via bargaining in a legislature shows how centralization reduces preference-matching, and recent work using "electoral agency" models formalizes the accountability argument. These models also provide insights into when decentralization may fail to deliver these benefits.

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File URL: http://www2.warwick.ac.uk/fac/soc/economics/research/workingpapers/publications/twerp721.pdf
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Publisher Info
Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 721.

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Length: 35 pages
Date of creation: 2005
Date of revision:
Handle: RePEc:wrk:warwec:721

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Related research
Keywords: Fiscal decentralization ; political economy ; local public goods;

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Find related papers by JEL classification:
H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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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.:
  1. Buchanan, James M, 1987. "The Constitution of Economic Policy," American Economic Review, American Economic Association, vol. 77(3), pages 243-50, June. [Downloadable!] (restricted)
    Other versions:
  2. Jeremy Edwards & Michael Keen, 1994. "Tax Competition and Leviathan," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich.
    Other versions:
  3. Brian Knight, 2004. "Legislative Representation, Bargaining Power, and the Distribution of Federal Funds: Evidence from the U.S. Senate," NBER Working Papers 10385, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Cremer, J. & Palfrey, T.R., 1994. "In or Out?: Centralization by Majority Vote," Papers 94.335, Toulouse - GREMAQ.
    Other versions:
  5. Paul Belleflamme & Jean Hindriks, 2001. "Yardstick Competition and Political Agency Problems," Working Papers 441, Queen Mary, University of London, Department of Economics. [Downloadable!]
    Other versions:
  6. Alberto Alesina & Enrico Spolaore, 1995. "On the Number and Size of Nations," NBER Working Papers 5050, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. Ben Lockwood, 2004. "Decentralization via Federal and Unitary Referenda," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 6(1), pages 79-108, 02. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. Oliver Lorz & Gerald Willmann, 2008. "Enlargement versus Deepening: The Trade-off Facing Economic Unions," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  2. Paula Salinas & Albert Solé-Ollé, 2009. "Evaluating the effects of decentralization on educational outcomes in Spain?," Working Papers 2009/10, Institut d'Economia de Barcelona (IEB). [Downloadable!]
  3. Paula Salinas Pena & Albert Sole-Olle, 2009. "Evaluating the effects of decentralization on educational outcomes in Spain," Working Papers in Economics 228, Universitat de Barcelona. Espai de Recerca en Economia. [Downloadable!]
  4. Michela Redoano, 2007. "Does Centralization Affect the Number and Size of Lobbies?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  5. Federico Etro, 2006. "Political geography," Public Choice, Springer, vol. 127(3), pages 321-343, June. [Downloadable!] (restricted)
  6. Iwan Barankay & Ben Lockwood, 2006. "Decentralization and the Productive Efficiency of Government: Evidence from Swiss Cantons," IZA Discussion Papers 2477, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  7. Alonso, Ricardo & Dessein, Wouter & Matouschek, Niko, 2006. "When Does Coordination Require Centralization?," CEPR Discussion Papers 5802, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  8. Bård Harstad, 2007. "Harmonization and Side Payments in Political Cooperation," American Economic Review, American Economic Association, vol. 97(3), pages 871-889, June. [Downloadable!]
  9. Sjef Ederveen & George Gelauff & JacquesPelkmans, 2006. "Assessing subsidiarity," CPB Documents 133, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
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