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

  • Stefan Voigt

    ()

  • Lorenz Blume

    ()

This paper explores the idea that institutional details matter and that attempts to estimate the economic effects of federalism by employing 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 to 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. Fisman, Raymond & Gatti, Roberta, 2000. "Decentralization and corruption - evidence across countries," Policy Research Working Paper Series 2290, The World Bank.
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  12. Lorenz Blume & Jens Müller & Stefan Voigt & Carsten Wolf, 2007. "The Economic Effects of Constitutions: Replicating – and Extending – Persson and Tabellini," CESifo Working Paper Series 2017, CESifo Group Munich.
  13. Frey, Bruno S. & Luechinger, Simon, 2004. "Decentralization as a disincentive for terror," European Journal of Political Economy, Elsevier, vol. 20(2), pages 509-515, June.
  14. SALMON, Pierre, 1987. "Decentralization as an incentive scheme," Institut des Mathématiques Economiques – Document de travail de l’I.M.E. (1974-1993) 98, Institut des Mathématiques Economiques. LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS, Université de Bourgogne.
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  16. 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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  28. Freille, Sebastian & Haque, Mohammad Emranul & Kneller, Richard Anthony, 2007. "Federalism, decentralisation and corruption," MPRA Paper 27535, University Library of Munich, Germany.
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  30. Panizza, Ugo, 1999. "On the determinants of fiscal centralization: Theory and evidence," Journal of Public Economics, Elsevier, vol. 74(1), pages 97-139, October.
  31. Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, vol. 76(3), pages 399-457, June.
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