Decentralization and Regional Government Size: an Application to the Spanish Case

Patricio Perez and David Cantarero ()
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Patricio Perez: University of Cantabria

International Center for Public Policy Working Paper Series, at AYSPS, GSU from International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University

Abstract: This paper studies the impact of decentralization on the size of regional governments in Spain controlling for economies of scale, interregional heterogeneity and institutional framework, and successfully tests some implications of the model. Firstly, it supports the classic public goods theory of a trade-off-between the economic benefits of size and the costs of heterogeneity. Secondly, it rejects the “Leviathan” hypothesis because of vertical power imbalance and lack of fiscal competition among regions. Thirdly, the paper argues that government size is mediated by financial resources obtained through intergovernmental grants, consistent with welfare economics and positive economic politics.

Keywords: government size; fiscal decentralization; leviathan hypothesis; vertical imbalances; flypaper effect. (search for similar items in EconPapers)
Pages: 28 pages
Date: 2010-11-01
New Economics Papers: this item is included in nep-geo, nep-pbe and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:ays:ispwps:paper1032

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