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Fiscal decentralization in the EU: Common patterns through a club convergence analysis

Author

Listed:
  • Francisco A. Blanco
  • Francisco J. Delgado
  • Maria J. Presno

Abstract

We study the degree of convergence in fiscal decentralization in the European Union in the period 1995–2015 analysing non-central expenditure and revenue as percentages of GDP and of the total expenditure or revenue. The sigma convergence analysis shows only a smooth convergence in the non-central revenue with regard to GDP, with significant divergences in the other indicators, especially after the beginning of the Great Recession. However, the club convergence approach indicates some clustering, with three clubs in the GDP perspective and four to five in the total approach. We also analyse the gap between the expenditure and the revenue as a proxy of fiscal responsibility, with sigma divergence for the entire sample, and now with three and two clubs respectively, with Denmark as the divergent country. These results show how European countries are quite heterogeneous in their views of fiscal federalism and decentralization.

Suggested Citation

  • Francisco A. Blanco & Francisco J. Delgado & Maria J. Presno, 2018. "Fiscal decentralization in the EU: Common patterns through a club convergence analysis," Working Papers. Collection A: Public economics, governance and decentralization 1812, Universidade de Vigo, GEN - Governance and Economics research Network.
  • Handle: RePEc:gov:wpaper:1812
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    File URL: http://infogen.webs.uvigo.es/WP/WP1812.pdf
    File Function: First version, 2018
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    More about this item

    Keywords

    decentralization; European Union; convergence;

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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