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Fiscal Decentralization, Economic Freedom, and Political and Civil Liberties in the Americas

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  • Antonio N. Bojanic

    () (Department of Economics, Tulane University)

Abstract

This paper analyzes the impact of fiscal decentralization on economic freedom and political and civil liberties in the Americas. Regarding the latter and with the full sample of countries, the findings suggest that decentralization initially worsens but eventually improves political and civil liberties, underlining the importance of fiscal decentralization as a driver for achieving basic liberties. When Canada and the US are excluded, the evidence shows that decentralization may eventually be a detriment for political and civil liberties. With respect to the impact of fiscal decentralization on economic freedom, decentralization first hinders but eventually increases freedom when all countries are included, emphasizing the point that a decentralization regime takes time to develop and function properly. When Canada and the US are excluded, decentralization initially increases but ultimately hampers freedom, demonstrating that if the decentralization regime does not address important matters like fiscal discipline, wealth inequality, and political accountability, economic freedom - like political and civil liberties - will also deteriorate.

Suggested Citation

  • Antonio N. Bojanic, 2016. "Fiscal Decentralization, Economic Freedom, and Political and Civil Liberties in the Americas," Working Papers 1609, Tulane University, Department of Economics.
  • Handle: RePEc:tul:wpaper:1609
    as

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    File URL: http://repec.tulane.edu/RePEc/pdf/tul1609.pdf
    File Function: First Version, August 2016
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    References listed on IDEAS

    as
    1. Chunli Shen & Jing Jin & Heng-fu Zou, 2012. "Fiscal Decentralization in China: History, Impact, Challenges and Next Steps," Annals of Economics and Finance, Society for AEF, vol. 13(1), pages 1-51, May.
    2. Fisman, Raymond & Gatti, Roberta, 2002. "Decentralization and corruption: evidence across countries," Journal of Public Economics, Elsevier, vol. 83(3), pages 325-345, March.
    3. Song, Yang, 2013. "Rising Chinese regional income inequality: The role of fiscal decentralization," China Economic Review, Elsevier, vol. 27(C), pages 294-309.
    4. Xie, Danyang & Zou, Heng-fu & Davoodi, Hamid, 1999. "Fiscal Decentralization and Economic Growth in the United States," Journal of Urban Economics, Elsevier, vol. 45(2), pages 228-239, March.
    5. Faguet, Jean-Paul, 2004. "Does decentralization increase government responsiveness to local needs?: Evidence from Bolivia," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 867-893, March.
    6. Agnese Sacchi & Simone Salotti, 2014. "The Effects of Fiscal Decentralization on Household Income Inequality: Some Empirical Evidence," Spatial Economic Analysis, Taylor & Francis Journals, vol. 9(2), pages 202-222, June.
    7. Francis, Paul & James, Robert, 2003. "Balancing Rural Poverty Reduction and Citizen Participation: The Contradictions of Uganda's Decentralization Program," World Development, Elsevier, vol. 31(2), pages 325-337, February.
    8. Thornton, John, 2007. "Fiscal decentralization and economic growth reconsidered," Journal of Urban Economics, Elsevier, vol. 61(1), pages 64-70, January.
    9. Neyapti, Bilin, 2010. "Fiscal decentralization and deficits: International evidence," European Journal of Political Economy, Elsevier, vol. 26(2), pages 155-166, June.
    10. Andreas P. Kyriacou & Leonel Muinelo-Gallo & Oriol Roca-Sagalés, 2015. "Fiscal decentralization and regional disparities: The importance of good governance," Papers in Regional Science, Wiley Blackwell, vol. 94(1), pages 89-107, March.
    11. Arzaghi, Mohammad & Henderson, J. Vernon, 2005. "Why countries are fiscally decentralizing," Journal of Public Economics, Elsevier, vol. 89(7), pages 1157-1189, July.
    12. International Monetary Fund, 2001. "Fiscal Decentralization and Governance; A Cross-Country Analysis," IMF Working Papers 01/71, International Monetary Fund.
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    More about this item

    Keywords

    Fiscal decentralization; economic freedom; political and civil liberties.;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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