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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/papers/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
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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
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  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)
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  1. Michela Redoano, 2007. "Does Centralization Affect the Number and Size of Lobbies?," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
    Other versions:
  2. 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:
  3. Alonso, Ricardo & Dessein, Wouter & Matouschek, Niko, 2006. "When Does Coordination Require Centralization?," CEPR Discussion Papers 5802, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  4. Sjef Ederveen & George Gelauff & JacquesPelkmans, 2006. "Assessing subsidiarity," CPB Documents 133, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
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