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The economic effects of federalism and decentralization—a cross-country assessment

  • Stefan Voigt

    ()

  • Lorenz Blume

    ()

This paper is based on the conjecture that institutional details matter and that attempts to estimate the economic effects of federalism by drawing on a simple dummy variable neglect potentially important institutional details. Based on a principal component analysis, seven aspects of both federalism and decentralization are used as variables for explaining differences in (1) fiscal policy, (2) government effectiveness, (3) economic productivity, and (4) happiness. The results show that institutional details do, indeed, matter. Different aspects of federalism impact on the outcome variables in different degrees. This study adds to our knowledge on the transmission mechanisms of federalism and decentralization.

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File URL: http://hdl.handle.net/10.1007/s11127-010-9745-z
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Article provided by Springer in its journal Public Choice.

Volume (Year): 151 (2012)
Issue (Month): 1 (April)
Pages: 229-254

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Handle: RePEc:kap:pubcho:v:151:y:2012:i:1:p:229-254
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100332

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  1. Bjørnskov, Christian & Dreher, Axel & Fischer, Justina AV, 2008. "Formal Institutions and Subjective Well-Being: Revisiting the Cross-Country Evidence," SSE/EFI Working Paper Series in Economics and Finance 699, Stockholm School of Economics.
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  11. Bjørnskov, Christian & Drehe, Axel & Fischer, Justina A.V., 2008. "On decentralization and life satisfaction," Economics Letters, Elsevier, vol. 99(1), pages 147-151, April.
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