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Fiscal decentralization and deficits: International evidence

  • Neyapti, Bilin

This paper investigates macroeconomic effects of fiscal decentralization, which has been a neglected area of research. Panel evidence for 16 countries over 1980-1998 indicates that expenditure and revenue decentralization reduce budget deficits. A principal finding is that the fiscal disciplining effect of fiscal decentralization increases with population size. Interestingly, absence of local elections is associated with greater effectiveness of fiscal decentralization. The benefits of expenditure decentralization decrease with ethnolinguistic fractionalization and quality of governance.

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Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 26 (2010)
Issue (Month): 2 (June)
Pages: 155-166

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Handle: RePEc:eee:poleco:v:26:y:2010:i:2:p:155-166
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505544

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