IDEAS home Printed from https://ideas.repec.org/a/aes/amfeco/v25y2023i63p558.html
   My bibliography  Save this article

Evolution of Fiscal Decentralisation in OECD Countries: A Club Convergence Analysis

Author

Listed:
  • Francisco J. Delgado

    (University of Oviedo and GEN, Oviedo, Spain)

  • Maria J. Presno

    (University of Oviedo, Spain)

Abstract

We study the fiscal decentralisation patterns in OECD countries through a club convergence approach. Our analysis covers 30 countries spanning 1995 to 2018 and considers the noncentral expenditure and revenue sides with two perspectives, as percentage of GDP and as percentage of the total government expenditure and revenue. The results show differences between the expenditure and revenue sides, but with five and six clubs on both sides for the GDP and total government perspectives, respectively. These results allow one to establish a typology based on the four dimensions analysed. In addition, our results suggest a divergent impact of the Great Recession at the overall level of countries and under the expenditure and revenue perspectives; however, simultaneously, that economic downturn seems to have reinforced the process of convergence within clubs under the expenditure perspective. We also study the dynamics of convergence over time using a rolling window estimation, for all countries and the clubs.

Suggested Citation

  • Francisco J. Delgado & Maria J. Presno, 2023. "Evolution of Fiscal Decentralisation in OECD Countries: A Club Convergence Analysis," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 25(63), pages 558-558, April.
    • Handle: RePEc:aes:amfeco:v:25:y:2023:i:63:p:558
    as

    Download full text from publisher

    File URL: http://www.amfiteatrueconomic.ro/temp/Article_3212.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
    2. Jorge Martinez-Vazquez & Santiago Lago-Peñas & Agnese Sacchi, 2017. "The Impact Of Fiscal Decentralization: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 31(4), pages 1095-1129, September.
    3. Peter C. B. Phillips & Donggyu Sul, 2007. "Transition Modeling and Econometric Convergence Tests," Econometrica, Econometric Society, vol. 75(6), pages 1771-1855, November.
    4. Liu, Fengyu & Feng, Jue & Zhai, Ge & Razzaq, Asif, 2022. "Influence of fiscal decentralization and renewable energy investment on ecological sustainability in EU: What is the moderating role of institutional governance?," Renewable Energy, Elsevier, vol. 200(C), pages 1265-1274.
    5. Vicente Esteve & Simon Sosvilla-Rivero & Cecilio Tamarit, 2000. "Convergence in fiscal pressure across EU countries," Applied Economics Letters, Taylor & Francis Journals, vol. 7(2), pages 117-123.
    6. Antonis Adam & Manthos Delis & Pantelis Kammas, 2014. "Fiscal decentralization and public sector efficiency: evidence from OECD countries," Economics of Governance, Springer, vol. 15(1), pages 17-49, February.
    7. Panizza, Ugo, 1999. "On the determinants of fiscal centralization: Theory and evidence," Journal of Public Economics, Elsevier, vol. 74(1), pages 97-139, October.
    8. Silvia Bertarelli & Roberto Censolo & Caterina Colombo, 2014. "Fiscal Convergence In The European Union Before The Crisis," Contemporary Economic Policy, Western Economic Association International, vol. 32(4), pages 784-801, October.
    9. Bhattacharyya, Sambit & Conradie, Louis & Arezki, Rabah, 2017. "Resource discovery and the politics of fiscal decentralization," Journal of Comparative Economics, Elsevier, vol. 45(2), pages 366-382.
    10. Regis, Paulo José & Cuestas, Juan Carlos & Chen, Yang, 2015. "Corporate tax in Europe: Towards convergence?," Economics Letters, Elsevier, vol. 134(C), pages 9-12.
    11. Jan K. Brueckner, 2004. "Fiscal Decentralization with Distortionary Taxation: Tiebout vs. Tax Competition," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(2), pages 133-153, March.
    12. Andreas P. Kyriacou & Leonel Muinelo-Gallo & Oriol Roca-Sagalés, 2017. "Regional inequalities, fiscal decentralization and government quality," Regional Studies, Taylor & Francis Journals, vol. 51(6), pages 945-957, June.
    13. Fabio Mazzola & Pietro Pizzuto, 2020. "Great Recession and club convergence in Europe: A cross‐country, cross‐region panel analysis (2000–2015)," Growth and Change, Wiley Blackwell, vol. 51(2), pages 676-711, June.
    14. Delgado, Francisco J. & Presno, Maria J. & Blanco , Francisco A., 2019. "Local taxation in the EU: A convergence study," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 45, pages 263-271.
    15. George R. Zodrow & Peter Mieszkowski, 2019. "Pigou, Tiebout, Property Taxation, and the Underprovision of Local Public Goods," World Scientific Book Chapters, in: George R Zodrow (ed.), TAXATION IN THEORY AND PRACTICE Selected Essays of George R. Zodrow, chapter 17, pages 525-542, World Scientific Publishing Co. Pte. Ltd..
    16. Chu, Angus C. & Yang, C.C., 2012. "Fiscal centralization versus decentralization: Growth and welfare effects of spillovers, Leviathan taxation, and capital mobility," Journal of Urban Economics, Elsevier, vol. 71(2), pages 177-188.
    17. Brueckner, Jan K., 2006. "Fiscal federalism and economic growth," Journal of Public Economics, Elsevier, vol. 90(10-11), pages 2107-2120, November.
    18. Jorge Martinez-Vazquez & Ming-Hung Yao, 2009. "Fiscal Decentralization and Public Sector Employment: A Cross-Country Analysis," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0903, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    19. Kocenda, Evzen & Kutan, Ali M. & Yigit, Taner M., 2008. "Fiscal convergence in the European Union," The North American Journal of Economics and Finance, Elsevier, vol. 19(3), pages 319-330, December.
    20. Francisco J. Delgado, 2021. "On the Determinants of Fiscal Decentralization: Evidence From the EU," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 23(56), pages 206-206, February.
    21. Nicholas Apergis & Arusha Cooray, 2014. "Convergence in sovereign debt ratios across heavily indebted EU countries: evidence from club convergence," Applied Economics Letters, Taylor & Francis Journals, vol. 21(11), pages 786-788, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Francisco A. Blanco & Francisco J. Delgado & Maria J. Presno, 2018. "Fiscal decentralization in the EU: Common patterns through a club convergence analysis," Working Papers. Collection A: Public economics, governance and decentralization 1812, Universidade de Vigo, GEN - Governance and Economics research Network.
    2. Francisco J. Delgado, 2021. "On the Determinants of Fiscal Decentralization: Evidence From the EU," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 23(56), pages 206-206, February.
    3. Bartolini, David & Ninka, Eniel & Santolini, Raffaella, 2017. "Tax Decentralisation, Labour productivity and Employment," MPRA Paper 81070, University Library of Munich, Germany.
    4. Reingewertz, Yaniv, 2014. "Fiscal Decentralization - a Survey of the Empirical Literature," MPRA Paper 59889, University Library of Munich, Germany.
    5. Choudhury, Atrayee & Sahu, Sohini, 2022. "Revisiting the nexus between fiscal decentralization and government size - The role of ethnic fragmentation," European Journal of Political Economy, Elsevier, vol. 75(C).
    6. Choudhury, Atrayee & Sahu, Sohini, 2023. "Reconciling the mixed evidence in the fiscal decentralization-government size nexus using panel quantile regression," Economic Modelling, Elsevier, vol. 125(C).
    7. Pietrovito, Filomena & Pozzolo, Alberto Franco & Resce, Giuliano & Scialà, Antonio, 2023. "Fiscal decentralization and income (re)distribution in OECD countries’ regions," Structural Change and Economic Dynamics, Elsevier, vol. 67(C), pages 69-81.
    8. Andreas P. Kyriacou & Oriol Roca-Sagalés, 2019. "Local Decentralization and the Quality of Public Services in Europe," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 145(2), pages 755-776, September.
    9. Calin Arcalean & Gerhard Glomm & Ioana Schiopu & Jens Suedekum, 2010. "Public budget composition, fiscal (de)centralization, and welfare," Canadian Journal of Economics, Canadian Economics Association, vol. 43(3), pages 832-859, August.
    10. Thierry Madiès & Grégoire Rota-Grasiozi & Jean-Pierre Tranchant & Cyril Trépier, 2018. "The economics of secession: a review of legal, theoretical, and empirical aspects," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 154(1), pages 1-18, December.
    11. Chu, Angus C. & Yang, C.C., 2012. "Fiscal centralization versus decentralization: Growth and welfare effects of spillovers, Leviathan taxation, and capital mobility," Journal of Urban Economics, Elsevier, vol. 71(2), pages 177-188.
    12. Qurat ul Ain & Tahir Yousaf & Yan Jie & Yasmeen Akhtar, 2020. "The Impact of Devolution on Government Size and Provision of Social Services: Evi¬dence from Pakistan," Hacienda Pública Española / Review of Public Economics, IEF, vol. 234(3), pages 105-135, September.
    13. Jorge Martinez-Vazquez & Santiago Lago-Peñas & Agnese Sacchi, 2017. "The Impact Of Fiscal Decentralization: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 31(4), pages 1095-1129, September.
    14. Kyriacou, Andreas & Roca-Sagalés, Oriol, 2023. "Fiscal Decentralization and Health Care Access and Quality: Evidence from Local Governments Around the World," MPRA Paper 116860, University Library of Munich, Germany.
    15. Hatfield, John William & Kosec, Katrina, 2013. "Federal competition and economic growth," Journal of Public Economics, Elsevier, vol. 97(C), pages 144-159.
    16. Tristan Canare, 2022. "Decentralization and welfare: Evidence from a panel of countries," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 93(3), pages 767-796, September.
    17. Canavire-Bacarreza, Gustavo & Martinez-Vazquez, Jorge & Yedgenov, Bauyrzhan, 2020. "Identifying and disentangling the impact of fiscal decentralization on economic growth," World Development, Elsevier, vol. 127(C).
    18. Qiao, Mo & Ding, Siying & Liu, Yongzheng, 2019. "Fiscal decentralization and government size: The role of democracy," European Journal of Political Economy, Elsevier, vol. 59(C), pages 316-330.
    19. Delgado, Francisco J. & Presno, Maria J. & Blanco , Francisco A., 2019. "Local taxation in the EU: A convergence study," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 45, pages 263-271.
    20. Bruno Emmanuel ONGO NKOA & Derick Ulrich YOUNDA, 2022. "L’urbanisation accroît-elle l’assiette fiscale locale dans un contexte de décentralisation en Afrique subsaharienne ?," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 55, pages 93-111.

    More about this item

    Keywords

    Decentralisation; club convergence; OECD; Great Recession.;
    All these keywords.

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aes:amfeco:v:25:y:2023:i:63:p:558. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Valentin Dumitru (email available below). General contact details of provider: https://edirc.repec.org/data/aseeero.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.