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Who honor the rules of federalism? Party system nationalization and fiscal performance

Author

Listed:
  • Santiago Lago-Peñas
  • Agnese Sacchi
  • Pablo Simon-Cosano

Abstract

This paper explores the impact of decentralization on countries’ fiscal outcomes paying attention to one aspect usually neglected in the literature: the relevance of self-interested local politics. Relevance that can be proxied by the nationalization of political party systems, namely the extent to which parties compete nationally oriented. Based on a sample of developed and developing countries over the period 1970-2011, our findings are twofold. First, fiscal decentralization has a positive effect on general governments' primary balance. Second, primary balance is negatively affected by the nationalization of party systems only when the latter is extremely weak.

Suggested Citation

  • Santiago Lago-Peñas & Agnese Sacchi & Pablo Simon-Cosano, 2014. "Who honor the rules of federalism? Party system nationalization and fiscal performance," Working Papers. Collection A: Public economics, governance and decentralization 1409, Universidade de Vigo, GEN - Governance and Economics research Network.
    • Handle: RePEc:gov:wpaper:1409
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    File URL: http://infogen.webs.uvigo.es/WP/WP1409.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Government primary balance; fiscal decentralization; regional authority; party system nationalization.;
    All these keywords.

    JEL classification:

    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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