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Fiscal Decentralization and Public Sector Size in Australia

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  • P.J. Grossman

Abstract

This paper examines the impact of fiscal decentralization and intergovernmental collusion, and the resulting fiscal dependence, on the size of the public sector in Australia. Contrary to evidence for the United States, fiscal decentralization is found to have no impact on public sector size in Australia. Three possible explanations for this finding were suggested the relatively small number of lower‐level governments; the economic insignificance of local governments; and the relative immobility of citizens. Fiscal dependence of State governments on the Commonwealth proves a significant determinant of public sector size, consistent with findings for the United States.
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Suggested Citation

  • P.J. Grossman, 1988. "Fiscal Decentralization and Public Sector Size in Australia," Economics Discussion / Working Papers 88-12, The University of Western Australia, Department of Economics.
    • Handle: RePEc:uwa:wpaper:88-12
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    2. Stefan Voigt, 2011. "Positive constitutional economics II—a survey of recent developments," Public Choice, Springer, vol. 146(1), pages 205-256, January.
    3. Pitlik, Hans & Schmid, Gunther & Strotmann, Harald, 2001. "Bargaining Power of Smaller States in Germany's Landerfinanzausgleich 1979-90," Public Choice, Springer, vol. 109(1-2), pages 183-201, October.
    4. Fox, William F. & Gurley, Tami, 2006. "Will consolidation improve sub-national governments ?," Policy Research Working Paper Series 3913, The World Bank.
    5. Jürgen, Göbel, 2009. "How can the Power of Leviathans be Measured?," MPRA Paper 13663, University Library of Munich, Germany.
    6. Zhu, Z. & Krug, B., 2005. "Is China a Leviathan?," ERIM Report Series Research in Management ERS-2004-103-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.

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