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The economics of fiscal decentralisation

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  • Vo, Duc Hong

Abstract

There is no complete overview or discussion of the literature of the economics of federalism and fiscal decentralization, even though scholarly interest in the topic has been increasing significantly over recent years. This paper provides a general, brief but comprehensive overview of the main insights from the literature on fiscal federalism and decentralization. In doing so, literature on fiscal federalism and decentralization is grouped into two main approaches: ‘first generation approach’ and ‘an emerging second generation approach’. The discussion generally covers the two notions of fiscal decentralization: ‘fiscal autonomy’ and ‘fiscal importance’ of subnational governments as the background of the most recently developed index of fiscal decentralization in Vo. The relevance of this discussion to any further development of a fiscal decentralization index is briefly noted.

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  • Vo, Duc Hong, 2010. "The economics of fiscal decentralisation," MPRA Paper 83991, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:83991
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    1. Zao Sun & Chun-Ping Chang & Yu Hao, 2017. "Fiscal decentralization and China’s provincial economic growth: a panel data analysis for China’s tax sharing system," Quality & Quantity: International Journal of Methodology, Springer, vol. 51(5), pages 2267-2289, September.
    2. Emilie Caldeira & Martial Foucault & Gregoire Rota-Graziosi, 2015. "Decentralization in Africa and the nature of local governments’ competition: evidence from Benin," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(6), pages 1048-1076, December.
    3. Michele Cincera & Antonio Estache & Wolf Alexander, 2012. "Would Less Fiscal Decentralization Reduce Public Sector Size across Sectors in Europe ?," Working Papers ECARES ECARES 2012-028, ULB -- Universite Libre de Bruxelles.
    4. Biao Huang & Jiebing Wu & Li Ye, 2023. "Fiscal decentralization, intergovernmental mobility, and the innovativeness of local governments' policy response in COVID‐19: Evidence from China," Public Administration & Development, Blackwell Publishing, vol. 43(2), pages 196-206, May.
    5. Kıvılcım Özge KARA, 2019. "Discussions on the Chance of Success and Efficiency of Fiscal Decentralisation," Sosyoekonomi Journal, Sosyoekonomi Society, issue 27(40).
    6. Mauro, Luciano & Pigliaru, Francesco & Carmeci, Gaetano, 2018. "Decentralization and growth: Do informal institutions and rule of law matter?," Journal of Policy Modeling, Elsevier, vol. 40(5), pages 873-902.
    7. Yulan Lv & Yumeng Pang & Buhari Doğan, 2022. "The role of Chinese fiscal decentralization in the governance of carbon emissions: perspectives from spatial effects decomposition and its heterogeneity," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 68(3), pages 635-668, June.
    8. Jason Delaney, 2019. "Comparing Apples to Apples: Estimating Fiscal Need in the United States with a Regression-Based Representative Expenditure Approach," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 47(3), pages 311-322, September.
    9. Alessio Mitra & Athanasios Chymis, 2022. "Federalism, but how? The impact of vertical fiscal imbalance on economic growth. Evidence from Belgium," Economics and Politics, Wiley Blackwell, vol. 34(2), pages 322-350, July.
    10. Fiorenza Carraro & Andrea Zatti, 2012. "Decentralized environmental taxation: a preliminary assessment," Chapters, in: Larry Kreiser & Ana Yábar Sterling & Pedro Herrera & Janet E. Milne & Hope Ashiabor (ed.), Carbon Pricing, Growth and the Environment, chapter 3, pages 33-49, Edward Elgar Publishing.
    11. Alessandro Petretto, 2013. "Need Equalization Transfers and Productive Efficiency of Local Governments," Rivista italiana degli economisti, Società editrice il Mulino, issue 1, pages 25-46.
    12. Changhee Kim & Hyunjung Kim & Kanghwa Choi, 2020. "Efficiency Analysis of Public Library Services Based on Establishing Entity and Outsourcing," Sustainability, MDPI, vol. 12(21), pages 1-15, November.
    13. Nadiia Matsiuk, 2022. "Thrive, survive, or perish: The impact of regional autonomy on the demographic dynamics of Italian Alpine territories," Journal of Regional Science, Wiley Blackwell, vol. 62(5), pages 1512-1558, November.
    14. Andrea Zatti & Fiorenza Carraro, 2013. "Environmental taxation and municipal fiscal federalism: remarks and perspectives on the Italian case study," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2013(2), pages 61-92.
    15. Thien Vu Tran & Joseph Drew & Masayoshi Noguchi, 2018. "The Role of Revenue Volatility in Local Expenditure Volatility: A Comparison of Tokyo Metropolitan Local Governments," Economic Papers, The Economic Society of Australia, vol. 37(4), pages 443-455, December.
    16. Melly, Christian, 2012. "Local Government Indebted-ness and Debt Management in Switzerland – Causes and consequences," Public Finance Quarterly, Corvinus University of Budapest, vol. 57(2), pages 164-172.
    17. Phuong Duy Nguyen & Duc Hong Vo & Chi Minh Ho & Anh The Vo, 2019. "Fiscal Decentralisation and Economic Growth across Provinces: New Evidence from Vietnam Using a Novel Measurement and Approach," JRFM, MDPI, vol. 12(3), pages 1-13, September.
    18. Lisa Grazzini & Alessandro Petretto, 2012. "Voting on devolution in a federal country with a bicameral national system," Economics of Governance, Springer, vol. 13(1), pages 51-72, March.
    19. Mao, Wenfeng & Cai, Siyuan & Lu, Jun & Yang, Haotian, 2023. "What triggered China's urban debt risk? Snowball effect under the growth target constraint," Structural Change and Economic Dynamics, Elsevier, vol. 67(C), pages 1-13.
    20. Lukas Mergele, 2016. "Are there gains from decentralizing public employment offices?," Working Papers 2015020, Berlin Doctoral Program in Economics and Management Science (BDPEMS).
    21. Vo, Duc, 2019. "Information Theory and an Entropic Approach to an Analysis of Fiscal Inequality," MPRA Paper 103291, University Library of Munich, Germany.
    22. Jian, Jianhui & Li, Huaqian & Meng, Leah & Zhao, Chunxiang, 2020. "Do policy burdens induce excessive managerial perks? Evidence from China’s stated-owned enterprises," Economic Modelling, Elsevier, vol. 90(C), pages 54-65.
    23. Duc Hong Vo & Thuan Nguyen & Dao Thi-Thieu Ha & Ngoc Phu Tran, 2021. "The Disparity of Revenue and Expenditure among Subnational Governments in Vietnam," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(1), pages 163-174, January.
    24. Fakhry El Feky & Nadia El Nemr & Sarah Mousa, 2023. "The Theoretical Impact of Fiscal Decentralisation on National Income Inequality: Does Quality of Governance Matter?," International Journal of Economics and Financial Issues, Econjournals, vol. 13(6), pages 71-84, November.

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    More about this item

    Keywords

    Decentralization theorem; Musgravian fiscal framework; Public choice; Tiebout sorting;
    All these keywords.

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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