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Fiscal Decentralization: A Political Economy Perspective

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  • Lockwood, Ben

    (University of Warwick and CEPR)

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/2008/twerp721.pdf
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Bibliographic 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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Keywords: Fiscal decentralization ; political economy ; local public goods;

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References

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  1. Besley, Timothy & Smart, Michael, 2007. "Fiscal restraints and voter welfare," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 755-773, April.
  2. Alesina, Alberto F & Angeloni, Ignazio & Etro, Federico, 2001. "The Political Economy of International Unions," CEPR Discussion Papers 3117, C.E.P.R. Discussion Papers.
  3. Alberto Alesina & Enrico Spolaore, 1995. "On the Number and Size of Nations," NBER Working Papers 5050, National Bureau of Economic Research, Inc.
  4. BELLEFLAMME, Paul & HINDRIKS, Jean, 2002. "Yardstick competition and political agency problems," CORE Discussion Papers 2002029, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. 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.
  6. Jeremy Edwards & Michael Keen, 1994. "Tax competition and Leviathon," IFS Working Papers W94/07, Institute for Fiscal Studies.
  7. Alberto Alesina & Ignazio Angeloni & Federico Etro, 2005. "International Unions," American Economic Review, American Economic Association, vol. 95(3), pages 602-615, June.
  8. Buchanan, James M, 1987. "The Constitution of Economic Policy," American Economic Review, American Economic Association, vol. 77(3), pages 243-50, June.
  9. J. Vernon Henderson & Ari Kuncoro, 2004. "Corruption in Indonesia," NBER Working Papers 10674, National Bureau of Economic Research, Inc.
  10. Cremer, Jacques & Palfrey, Thomas R., 1996. "In or out?: Centralization by majority vote," European Economic Review, Elsevier, vol. 40(1), pages 43-60, January.
  11. 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.
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Citations

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Cited by:
  1. Federico Etro, 2006. "Political geography," Public Choice, Springer, vol. 127(3), pages 321-343, June.
  2. Barankay, Iwan & Lockwood, Ben, 2007. "Decentralization and the productive efficiency of government: Evidence from Swiss cantons," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 1197-1218, June.
  3. 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).
  4. Ligthart, J.E. & Rider, M. & Wang, R., 2013. "Does the Fiscal Decentralization Promote Public Safety? Evidence from United States," Discussion Paper 2013-021, Tilburg University, Center for Economic Research.
  5. Michela Redoano, 2007. "Does Centralization Affect the Number and Size of Lobbies?," CESifo Working Paper Series 1968, CESifo Group Munich.
  6. Alonso, Ricardo & Dessein, Wouter & Matouschek, Niko, 2006. "When Does Coordination Require Centralization?," CEPR Discussion Papers 5802, C.E.P.R. Discussion Papers.
  7. George Gelauff & Sjef Ederveen & J.L.M. Pelkmans, 2006. "Assessing subsidiarity," CPB Document 133, CPB Netherlands Bureau for Economic Policy Analysis.
  8. Bård Harstad, 2007. "Harmonization and Side Payments in Political Cooperation," American Economic Review, American Economic Association, vol. 97(3), pages 871-889, June.

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