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Should central government seek to control the level of local authority expenditures

Author

Listed:
  • John Fender
  • Peter A. Watt

Abstract

Should local authorities be free to determine their expenditure, provided they finance changes in spending by changes in local taxation? We set up a theoretical framework to analyse this issue, and discuss three arguments that have been put forward for central control of such spending. The first relates to tax spillovers, the second to distributional effects combined with imperfect local democracy and the third considers self-interested local politicians. While these arguments cannot be entirely dismissed, they are subject to numerous qualifications and, if correct, would imply the desirability of a number of policies other than expenditure capping.

Suggested Citation

  • John Fender & Peter A. Watt, 2002. "Should central government seek to control the level of local authority expenditures," Fiscal Studies, Institute for Fiscal Studies, vol. 23(2), pages 265-285, June.
    • Handle: RePEc:ifs:fistud:v:23:y:2002:i:2:p:265-285
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    Cited by:

    1. Frédéric Marty, 2008. "Crise des subprimes et finances publiques locales : Le cas des « obligations municipales » américaines," Documents de Travail de l'OFCE 2008-20, Observatoire Francais des Conjonctures Economiques (OFCE).

    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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