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Fiscal Decentralization and Government Size: An International Test for Leviathan Accounting for Unmeasured Economic Activity

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  • John Anderson
  • Hendrik van den Berg

Abstract

Tests for the presence of Leviathan, evidenced by a positive relationship between the size of government measured as a percentage of GDP, and the degree of fiscal centralization, have provided mixed results. We derive alternative measures of the size of government taking into account household and informal market activity. Traditional Leviathan models are then re-estimated for an international sample of forty-five countries. Controlling for income, population, intergovernmental grants, and urbanization we test whether fiscal centralization is responsible for the relative size of government. We find no evidence of a relationship between fiscal centralization and government size. Copyright Kluwer Academic Publishers 1998

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  • John Anderson & Hendrik van den Berg, 1998. "Fiscal Decentralization and Government Size: An International Test for Leviathan Accounting for Unmeasured Economic Activity," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(2), pages 171-186, May.
    • Handle: RePEc:kap:itaxpf:v:5:y:1998:i:2:p:171-186
    DOI: 10.1023/A:1008690304663
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