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Revenue decentralization and inflation: A re-evaluation


  • Baskaran, Thushyanthan


A problematic feature of the existing empirical literature on the relationship between revenue decentralization (RD) and inflation is the use of inaccurate measures for RD. Using a newly constructed measure for RD that accounts for over-time changes in sub-national tax autonomy, this paper finds that RD leads to lower inflation.

Suggested Citation

  • Baskaran, Thushyanthan, 2012. "Revenue decentralization and inflation: A re-evaluation," Economics Letters, Elsevier, vol. 116(3), pages 298-300.
  • Handle: RePEc:eee:ecolet:v:116:y:2012:i:3:p:298-300 DOI: 10.1016/j.econlet.2012.03.015

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    References listed on IDEAS

    1. repec:cup:apsrev:v:94:y:2000:i:04:p:837-857_22 is not listed on IDEAS
    2. Dan Stegarescu, 2005. "Public sector decentralisation: measurement concepts and recent international trends," Fiscal Studies, Institute for Fiscal Studies, vol. 26(3), pages 301-333, September.
    3. Levy-Yeyati, Eduardo & Sturzenegger, Federico, 2005. "Classifying exchange rate regimes: Deeds vs. words," European Economic Review, Elsevier, vol. 49(6), pages 1603-1635, August.
    4. King, David & Ma, Yue, 2001. "Fiscal decentralization, central bank independence, and inflation," Economics Letters, Elsevier, vol. 72(1), pages 95-98, July.
    5. Cukierman, Alex & Webb, Steven B & Neyapti, Bilin, 1992. "Measuring the Independence of Central Banks and Its Effect on Policy Outcomes," World Bank Economic Review, World Bank Group, vol. 6(3), pages 353-398, September.
    6. Neyapti, Bilin, 2004. "Fiscal decentralization, central bank independence and inflation: a panel investigation," Economics Letters, Elsevier, vol. 82(2), pages 227-230, February.
    7. Thornton, John, 2007. "Further evidence on revenue decentralization and inflation," Economics Letters, Elsevier, vol. 95(1), pages 140-145, April.
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    Cited by:

    1. Makreshanska Suzana & Jovanovski Kiril, 2014. "Impact Of Fiscal Decentralization On Price Stability In The European Countries," Journal Articles, Center For Economic Analyses, pages 25-34, December.
    2. Oto-Peralías, Daniel & Romero-Ávila, Diego & Usabiaga, Carlos, 2013. "Does fiscal decentralization mitigate the adverse effects of corruption on public deficits?," European Journal of Political Economy, Elsevier, vol. 32(C), pages 205-231.
    3. Hessami, Zohal & Uebelmesser, Silke, 2013. "Empirical determinants of in-kind redistribution: Partisan biases and the role of inflation," Economics Letters, Elsevier, vol. 118(2), pages 318-320.
    4. repec:bla:jecsur:v:31:y:2017:i:4:p:1095-1129 is not listed on IDEAS
    5. 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.

    More about this item


    Fiscal decentralization; Inflation; Sub-national tax autonomy;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • H29 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue


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