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Old and New Theories of Fiscal Federalism, Organizational Design Problems, and Tiebout

Author

Listed:
  • Giampaolo Garzarelli

    (University of Rome, 'La Sapienza')

Abstract

This work is a contribution to the Second Generation Theory (SGT) of fiscal federalism that studies fiscal federalism through contemporary economic and industrial organization theory. First, it establishes context by introducing the two classic motivations in support of federalism, namely, incentives and knowledge. Second, it succinctly discusses the incentive-based organizational approach of the SGT. Third, it shows that the Tiebout model already embeds an organizational approach, which instead rests on a knowledge motivation. The underlying theme is that the SGT should include both the incentive and knowledge motivations for fiscal decentralization.

Suggested Citation

  • Giampaolo Garzarelli, 2005. "Old and New Theories of Fiscal Federalism, Organizational Design Problems, and Tiebout," Public Economics 0509009, EconWPA.
  • Handle: RePEc:wpa:wuwppe:0509009 Note: Type of Document - pdf; pages: 18
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    File URL: http://econwpa.repec.org/eps/pe/papers/0509/0509009.pdf
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    References listed on IDEAS

    as
    1. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
    2. Oliver Volckart, 2002. "No Utopia: Government Without Territorial Monopoly in Medieval Central Europe," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 158(2), pages 325-325, June.
    3. repec:cup:apsrev:v:55:y:1961:i:04:p:831-842_12 is not listed on IDEAS
    4. Yingyi Qian & Barry R. Weingast, 1997. "Federalism as a Commitment to Reserving Market Incentives," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 83-92, Fall.
    5. Mariano Tommasi & Federico Weinschelbaum, 2007. "Centralization vs. Decentralization: A Principal-Agent Analysis," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 9(2), pages 369-389, April.
    6. Persson, Torsten & Tabellini, Guido, 1996. "Federal Fiscal Constitutions: Risk Sharing and Moral Hazard," Econometrica, Econometric Society, vol. 64(3), pages 623-646, May.
    7. Seabright, Paul, 1996. "Accountability and decentralisation in government: An incomplete contracts model," European Economic Review, Elsevier, vol. 40(1), pages 61-89, January.
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    Cited by:

    1. Vigvári, András, 2009. "Atipikus önkormányzati eladósodás Magyarországon
      [Atypical local-government indebtedness in Hungary]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 709-730.

    More about this item

    Keywords

    Economic organization; Incentives; Knowledge; Second Generation Theory of fiscal federalism.;

    JEL classification:

    • D79 - Microeconomics - - Analysis of Collective Decision-Making - - - Other
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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