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Economic Integration and Fiscal Decentralization : Evidence from OECD Countries

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Author Info
Stegarescu, Dan
Abstract

Drawing on recent work on the creation and breakup of countries, this paper examines the impact of economic and political integration on the vertical government structure. It argues that by increasing the market size and the benefits from the decentralized provision of public goods, integration might have triggered the recent process of fiscal decentralization in OECD countries. Based on a theoretical framework, the empirical panel analysis relates the degree of public sector decentralization to economic and European integration, controlling for inter-regional heterogeneity, economies of scale, and institutions. The results found mostly support a decentralizing effect of economic and European integration, particularly in the context of preference heterogeneity, whereas participation of sub-national governments in central decision-making is associated with increasing centralization. --

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 04-86.

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Date of creation: 2004
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Handle: RePEc:zbw:zewdip:2890

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Related research
Keywords: Fiscal Decentralization; Economic Integration; European Union; ?Sandwich? Hypothesis;

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Find related papers by JEL classification:
H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
F15 - International Economics - - Trade - - - Economic Integration

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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. Antonio Sciala' & Paolo Liberati, 2008. "The impact of economic openness on the vertical structure of the public sector," "Marco Fanno" Working Papers 0085, Dipartimento di Scienze Economiche "Marco Fanno". [Downloadable!]
  2. Stegarescu, Dan, 2005. "Centralizing Tendencies in the Public Sector in Germany," ZEW Discussion Papers 05-46, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  3. Federico Etro, 2006. "Political geography," Public Choice, Springer, vol. 127(3), pages 321-343, June. [Downloadable!] (restricted)
  4. Freinkman, Lev & Plekhanov, Alexander, 2005. "What determines the extent of fiscal decentralization ? The Russian paradox," Policy Research Working Paper Series 3710, The World Bank. [Downloadable!]
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