IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/3254.html
   My bibliography  Save this paper

Decentralization or fiscal autonomy ? What does really matter ? effects on growth and public sector size in European transition countries

Author

Listed:
  • Meloche, Jean-Philippe
  • Vaillancourt, Francois
  • Yilmaz, Serdar

Abstract

This paper examines the importance of fiscal autonomy in the analysis of decentralization. Using new data published by the OECD (2001 and 2002), it reproduces several indicators and proposes new measures of decentralization that take into consideration su-bnational governments'autonomy over their revenues. Two models are reproduced: Davoodi and Zou (1998) on decentralization and economic growth,and Oates (1985), on decentralization and public sector size. Some evidence suggests that fiscal autonomy positively affects economic growth. Also, it seems to affect the size of the state, but evidence on this relation is limited. Despite some statistical weaknesses, there are sufficient indications to argue that sub-national governments'fiscal autonomy should be a major concern when measuring decentralization.

Suggested Citation

  • Meloche, Jean-Philippe & Vaillancourt, Francois & Yilmaz, Serdar, 2004. "Decentralization or fiscal autonomy ? What does really matter ? effects on growth and public sector size in European transition countries," Policy Research Working Paper Series 3254, The World Bank.
    • Handle: RePEc:wbk:wbrwps:3254
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2004/04/15/000012009_20040415162715/Rendered/PDF/WPS3254.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ehdaie, Jaber, 1994. "Fiscal decentralization and the size of the government : an extension with evidence from cross-country data," Policy Research Working Paper Series 1387, The World Bank.
    2. Oates, Wallace E, 1985. "Searching for Leviathan: An Empirical Study," American Economic Review, American Economic Association, vol. 75(4), pages 748-757, September.
    3. Davoodi, Hamid & Zou, Heng-fu, 1998. "Fiscal Decentralization and Economic Growth: A Cross-Country Study," Journal of Urban Economics, Elsevier, vol. 43(2), pages 244-257, March.
    4. Jorge Martinez-Vazquez & Robert McNab, 1997. "Fiscal Decentralization, Economic Growth, and Democratic Governance," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper9707, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    5. Brennan,Geoffrey & Buchanan,James M., 2006. "The Power to Tax," Cambridge Books, Cambridge University Press, number 9780521027922, September.
    6. Akai, Nobuo & Sakata, Masayo, 2002. "Fiscal decentralization contributes to economic growth: evidence from state-level cross-section data for the United States," Journal of Urban Economics, Elsevier, vol. 52(1), pages 93-108, July.
    7. Pranab Bardhan, 2002. "Decentralization of Governance and Development," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 185-205, Fall.
    8. Roy Bahl, 1999. "Implementation Rules For Fiscal Decentralization," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper9901, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    9. Jin, Jing & Zou, Heng-fu, 2002. "How does fiscal decentralization affect aggregate, national, and subnational government size?," Journal of Urban Economics, Elsevier, vol. 52(2), pages 270-293, September.
    10. Ebel, Robert D. & Yilmaz, Serdar, 2002. "On the measurement and impact of fiscal decentralization," Policy Research Working Paper Series 2809, The World Bank.
    11. Ms. Era Dabla-Norris & Mr. Paul R Wade, 2002. "The Challenge of Fiscal Decentralization in Transition Countries," IMF Working Papers 2002/103, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Reingewertz, Yaniv, 2014. "Fiscal Decentralization - a Survey of the Empirical Literature," MPRA Paper 59889, University Library of Munich, Germany.
    2. Soko Aida, 2018. "(Dis)Advantages af Decentralization Models Driven by Non-Economic Reasons: The Case of Bosnia and Herzegovina," South East European Journal of Economics and Business, Sciendo, vol. 13(1), pages 81-92, June.
    3. Jorge Martinez-Vazquez & Santiago Lago-Peñas & Agnese Sacchi, 2017. "The Impact Of Fiscal Decentralization: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 31(4), pages 1095-1129, September.
    4. Martinez-Vazquez, Jorge & McNab, Robert M., 2003. "Fiscal Decentralization and Economic Growth," World Development, Elsevier, vol. 31(9), pages 1597-1616, September.
    5. Lars P. Feld & Horst Zimmermann & Thomas Döring, 2003. "Föderalismus, Dezentralität und Wirtschaftswachstum," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 72(3), pages 361-377.
    6. Philip Bodman & Harry Campbell & Kelly-Ana Heaton & Andrew Hodge, "undated". "Fiscal Decentralisation, Macroeconomic Conditions and Economic Growth in Australia," MRG Discussion Paper Series 2609, School of Economics, University of Queensland, Australia.
    7. Qurat ul Ain & Tahir Yousaf & Yan Jie & Yasmeen Akhtar, 2020. "The Impact of Devolution on Government Size and Provision of Social Services: Evi¬dence from Pakistan," Hacienda Pública Española / Review of Public Economics, IEF, vol. 234(3), pages 105-135, September.
    8. Lars P. Feld & Gebhard Kirchgässner & Christoph A. Schaltegger, 2004. "Fiscal Federalism and Economic Performance: Evidence from Swiss Cantons," Marburg Working Papers on Economics 200420, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    9. Hatfield, John William & Kosec, Katrina, 2013. "Federal competition and economic growth," Journal of Public Economics, Elsevier, vol. 97(C), pages 144-159.
    10. Jon H. Fiva, 2005. "New Evidence on Fiscal Decentralization and the Size of Government," CESifo Working Paper Series 1615, CESifo.
    11. Jon H. Fiva, 2006. "New Evidence on the Effect of Fiscal Decentralization on the Size and Composition of Government Spending," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 62(2), pages 250-280, June.
    12. Hatfield, John William, 2015. "Federalism, taxation, and economic growth," Journal of Urban Economics, Elsevier, vol. 87(C), pages 114-125.
    13. Makreshanska, Suzana & Petrevski, Goran, 2016. "Fiscal decentralization and government size across Europe," MPRA Paper 82472, University Library of Munich, Germany.
    14. Whitney Buser, 2011. "The impact of fiscal decentralization on economics performance in high-income OECD nations: an institutional approach," Public Choice, Springer, vol. 149(1), pages 31-48, October.
    15. Jorge Martinez-Vazquez & Ming-Hung Yao, 2009. "Fiscal Decentralization and Public Sector Employment: A Cross-Country Analysis," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0903, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    16. Thushyanthan Baskaran, 2010. "On the link between fiscal decentralization and public debt in OECD countries," Public Choice, Springer, vol. 145(3), pages 351-378, December.
    17. 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.
    18. M A B Siddique & Heru Wibowo & Yanrui Wu, 2014. "Fiscal Decentralisation and Inequality in Indonesia: 1999-2008," Economics Discussion / Working Papers 14-22, The University of Western Australia, Department of Economics.
    19. Nobuo Akai & Masayo Hosoi & Yukihiro Nishimura, 2009. "Fiscal Decentralization And Economic Volatility: Evidence From State‐Level Cross‐Section Data Of The Usa," The Japanese Economic Review, Japanese Economic Association, vol. 60(2), pages 223-235, June.
    20. Andrés Rodríguez-Pose & Roberto Ezcurra, 2011. "Is fiscal decentralization harmful for economic growth? Evidence from the OECD countries," Journal of Economic Geography, Oxford University Press, vol. 11(4), pages 619-643, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:3254. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.