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Fiscal decentralization in Spain: An asymmetric transition to democracy

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Abstract

Asymmetric fiscal decentralization, by which we mean different fiscal arrangements between the central government and different groups of, or individual, lower-level governments, may be justified from an economic efficiency perspective. As argued by Tiebout (1956), Oates (1972) and others, a decentralized system of regional and local governments is better able to accommodate differences in tastes for public goods and services. This efficiency argument calls for decentralization of fiscal authority to regional and local governments, but not necessarily asymmetric decentralization. However, when the differences in tastes for public goods and services arise out of differences in history, culture and language across regions of a country, asymmetric treatment may be justified. History, culture and language may influence how a group of people (a region) views autonomy, independence and fiscal authority. Some regions may have had experience with autonomous government in the past, they may have a culture that is strongly reliant upon (or leery of) the central government, or they may be fearful of losing their separate languages if they do not have special arrangements. To accommodate differences in taste for independence, autonomy, and fiscal authority, it may be necessary to have different fiscal arrangements between the central government and the different regions comprising the country.

Suggested Citation

  • Teresa Garcia-Milà & Therese J. McGuire, 2002. "Fiscal decentralization in Spain: An asymmetric transition to democracy," Economics Working Papers 866, Department of Economics and Business, Universitat Pompeu Fabra.
  • Handle: RePEc:upf:upfgen:866
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    1. Teresa Garcia-Milà & Timothy J. Goodspeed & Therese J. McGuire, 2001. "Fiscal decentralization policies and sub-national government debt in evolving federations," Economics Working Papers 549, Department of Economics and Business, Universitat Pompeu Fabra, revised May 2002.
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    Cited by:

    1. Paula Salinas Pena & Albert Sole-Olle, 2009. "Evaluating the effects of decentralization on educational outcomes in Spain," Working Papers in Economics 228, Universitat de Barcelona. Espai de Recerca en Economia.
    2. Richard M Bird & Andrey V Tarasov, 2004. "Closing the gap: fiscal imbalances and intergovernmental transfers in developed federations," Environment and Planning C: Government and Policy, Pion Ltd, London, vol. 22(1), pages 77-102, February.
    3. Ahmad, Ehtisham & Brosio, Giorgio, 2009. "Decentralization and local service provision: what do we know?," LSE Research Online Documents on Economics 38347, London School of Economics and Political Science, LSE Library.
    4. Emili Tortosa Ausina & Diego Prior & María Teresa Balaguer-Coll, 2006. "Decentralization And Effiency In Spanish Local Goverment," Working Papers. Serie EC 2006-02, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    5. Francois Vaillancourt & Richard M.Bird, 2004. "Expenditure-Based Equalization Transfers," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0410, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    6. Maria Balaguer-Coll & Diego Prior & Emili Tortosa-Ausina, 2010. "Decentralization and efficiency of local government," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 45(3), pages 571-601, December.
    7. Ehtisham Ahmad & Giorgio Brosio & Vito Tanzi, 2008. "Local Service Provision in Selected OECD Countries; Do Decentralized Operations Work Better?," IMF Working Papers 08/67, International Monetary Fund.
    8. Peter Claeys, 2011. "If you want me to stay, pay," IREA Working Papers 201101, University of Barcelona, Research Institute of Applied Economics, revised Feb 2011.
    9. Elisenda Paluzie, 2010. "The Costs and Benefits of Staying Together: The Catalan Case in Spain," Chapters,in: The Political Economy of Inter-Regional Fiscal Flows, chapter 14 Edward Elgar Publishing.

    More about this item

    Keywords

    Fiscal decentralization; autonomous communities; asymmetric devolution; Spanish regions; fiscal imbalance;

    JEL classification:

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

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