On the Link Between Fiscal Decentralization and Public Debt in OECD Countries
Excessive borrowing by subnational governments is considered to be one of the perils of fiscal decentralization. On the other hand, fiscal decentralization might ensure the scal stability of the public sector by constraining Leviathan governments. Since the impact of decentralized government on fiscal outcomes is therefore ambiguous from a theoretical perspective, we explore this question empirically with a panel of 17 OECD countries over the 1975-2001 period. Our findings suggest that expenditure decentralization signicantly reduces public indebtedness, whereas tax decentralization and vertical fiscal imbalances are insignicant.
|Date of creation:||2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Henning Bohn & Robert P. Inman, 1996.
"Balanced Budget Rules and Public Deficits: Evidence from the U.S. States,"
NBER Working Papers
5533, National Bureau of Economic Research, Inc.
- Bohn, Henning & Inman, Robert P., 1996. "Balanced-budget rules and public deficits: evidence from the U.S. states," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 45(1), pages 13-76, December.
- Sharma, Chanchal Kumar, 2004. "Why Decentralization ? The Puzzle of causation," MPRA Paper 196, University Library of Munich, Germany, revised Feb 2005.
- Wildasin, David E., 1997.
"Externalities and bailouts : hard and soft budget constraints in intergovernmental fiscal relations,"
Policy Research Working Paper Series
1843, The World Bank.
- David E. Wildasin, 2001. "Externalities and Bailouts: Hard and Soft Budget Constraints in Intergovernmental Fiscal Relations," Public Economics 0112002, EconWPA.
- J. Kornai & E. Maskin & G. Roland., 2004.
"Understanding the Soft Budget Constraint,"
N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 12.
- J�nos Kornai & Eric Maskin & G�rard Roland, 2003. "Understanding the Soft Budget Constraint," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1095-1136, December.
- J. Kornai & E. Maskin & G. Roland., 2004. "Understanding the Soft Budget Constraint," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 11.
- Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
- Ebel, Robert D. & Yilmaz, Serdar, 2002. "On the measurement and impact of fiscal decentralization," Policy Research Working Paper Series 2809, The World Bank.
- Markus Freitag & Adrian Vatter, 2008. "Decentralization and Fiscal Discipline in Sub-national Governments: Evidence from the Swiss Federal System," Publius: The Journal of Federalism, Oxford University Press, vol. 38(2), pages 272-294, Spring.
- Reiner Eichenberger & Mark Schelker, 2007. "Independent and competing agencies: An effective way to control government," Public Choice, Springer, vol. 130(1), pages 79-98, January.
- Francesco Lagona & Fabio Padovano, 2007. "A nonlinear principal component analysis of the relationship between budget rules and fiscal performance in the European Union," Public Choice, Springer, vol. 130(3), pages 401-436, March.
- Marlow, Michael L, 1991. " Privatization and Government Size," Public Choice, Springer, vol. 68(1-3), pages 273-76, January.
- Volkerink, Bjorn & De Haan, Jakob, 2001. " Fragmented Government Effects on Fiscal Policy: New Evidence," Public Choice, Springer, vol. 109(3-4), pages 221-42, December.
- Schaltegger, Christoph A. & Feld, Lars P., 2009.
"Are fiscal adjustments less successful in decentralized governments?,"
European Journal of Political Economy,
Elsevier, vol. 25(1), pages 115-123, March.
- Christoph A. Schaltegger & Lars P. Feld, 2007. "Are Fiscal Adjustments less Successful in Decentralized Governments?," CREMA Working Paper Series 2007-06, Center for Research in Economics, Management and the Arts (CREMA).
- Christoph A. Schaltegger & Lars P. Feld, 2007. "Are Fiscal Adjustments less Successful in Decentralized Governments?," CESifo Working Paper Series 1946, CESifo Group Munich.
- Neck, Reinhard & Getzner, Michael, 2001. " Politico-Economic Determinants of Public Debt Growth: A Case Study for Austria," Public Choice, Springer, vol. 109(3-4), pages 243-68, December.
- Timothy Goodspeed, 2002. "Bailouts in a Federation," International Tax and Public Finance, Springer, vol. 9(4), pages 409-421, August.
- Fisman, Raymond & Gatti, Roberta, 2002. " Decentralization and Corruption: Evidence from U.S. Federal Transfer Programs," Public Choice, Springer, vol. 113(1-2), pages 25-35, October.
- Assaf Razin & Efraim Sadka, 1989.
"International Tax Competition and Gains from Tax Harmonization,"
NBER Working Papers
3152, National Bureau of Economic Research, Inc.
- Razin, Assaf & Sadka, Efraim, 1991. "International tax competition and gains from tax harmonization," Economics Letters, Elsevier, vol. 37(1), pages 69-76, September.
- Beck, Thorsten & Clarke, George & Groff, Alberto & Keefer, Philip & Walsh, Patrick, 2000. "New tools and new tests in comparative political economy - the database of political institutions," Policy Research Working Paper Series 2283, The World Bank.
- Apolte, Thomas, 2001. " How Tame Will Leviathan Become in Institutional Competition? Competition among Governments in the Provision of Public Goods," Public Choice, Springer, vol. 107(3-4), pages 359-81, June.
- Christopher F Baum, 2000. "XTTEST3: Stata module to compute Modified Wald statistic for groupwise heteroskedasticity," Statistical Software Components S414801, Boston College Department of Economics, revised 05 Jul 2001.
- de Mello, Luiz Jr, 2000. "Fiscal Decentralization and Intergovernmental Fiscal Relations: A Cross-Country Analysis," World Development, Elsevier, vol. 28(2), pages 365-380, February.
- John Elder & Peter E. Kennedy, 2001. "Testing for Unit Roots: What Should Students Be Taught?," The Journal of Economic Education, Taylor & Francis Journals, vol. 32(2), pages 137-146, January.
- Oates, Wallace E, 1985. "Searching for Leviathan: An Empirical Study," American Economic Review, American Economic Association, vol. 75(4), pages 748-57, September.
- Francesca Fornasari & Steven B. Webb & Heng-fu Zou, 1999.
"The Macroeconomic Impact of Decentralized Spending and Deficits: International Evidence,"
CEMA Working Papers
28, China Economics and Management Academy, Central University of Finance and Economics, revised Oct 2000.
- Francesca Fornasari & Steven B. Webb & Heng-fu Zou, 2000. "The Macroeconomic Impact of Decentralized Spending and Deficits: International Evidence," Annals of Economics and Finance, Society for AEF, vol. 1(2), pages 403-433, November.
- Alexander Plekhanov & Raju Jan Singh, 2005.
"How Should Subnational Government Borrowing Be Regulated? Some Cross-Country Empirical Evidence,"
IMF Working Papers
05/54, International Monetary Fund.
- Alexander Plekhanov & Raju Singh, 2006. "How Should Subnational Government Borrowing Be Regulated?Some Cross-Country Empirical Evidence," IMF Staff Papers, Palgrave Macmillan, vol. 53(3), pages 4.
- Ernesto H. Stein & Jorge M. Streb, 1998.
"Fiscal Decentralization and Government Size in Latin America,"
IDB Publications (Working Papers)
6436, Inter-American Development Bank.
- Ernesto Stein, 1999. "Fiscal Decentralization and Government Size in Latin America," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 357-391, November.
- Ernesto H. Stein, 1998. "Fiscal Decentralization and Government Size in Latin America," Research Department Publications 4112, Inter-American Development Bank, Research Department.
- Kiewiet, D Roderick & Szakaly, Kristin, 1996. "Constitutional Limitations on Borrowing: An Analysis of State Bonded Indebtedness," Journal of Law, Economics and Organization, Oxford University Press, vol. 12(1), pages 62-97, April.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:21599. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht)
If references are entirely missing, you can add them using this form.