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Fiscal Competition, Decentralization, Leviathan, and Growth

  • Ken Tabata

    ()

    (Kwansei Gakuin University)

This paper studies the implications of different fiscal regimes (i.e. centralized vs decentralized) for economic growth and welfare by incorporating Wilson (2005)-type fiscal competition model into a Barro (1990)-type endogenous growth model. We show that fiscal decentralization is more desirable than fiscal centralization for economic growth, when the degree of selfishness of central government bureaucrats is high, and the relative political power of the young to the old is low. We also show that the growth-maximizing fiscal regime is also welfare-maximizing.

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File URL: http://192.218.163.163/RePEc/pdf/kgdp49.pdf
File Function: First version, 2009
Download Restriction: no

Paper provided by School of Economics, Kwansei Gakuin University in its series Discussion Paper Series with number 49.

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Length: 26 pages
Date of creation: Nov 2009
Date of revision: Nov 2009
Handle: RePEc:kgu:wpaper:49
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