Does fiscal decentralization foster regional investment in productive infrastructure?

Andreas Kappeler, Albert Solé-Ollé, Andreas Stephan and Timo Valila

No 273, Working Paper Series in Economics and Institutions of Innovation from Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

Abstract: The aim of this paper is to analyze the effect of revenue decentralization on the provision of infrastructure at the sub-national level. We estimate the effects of revenue decentralization and earmarked grant financing on the level of sub-national infrastructure investment in 20 European countries over the period 1990-2009. The results are interpreted in light of the predictions of the theory on fiscal federalism. We find that it is sub-national infrastructure investment that increases after revenue decentralization and not investment in redistribution. However, the effect of revenue decentralization is lower the higher the use of earmarked grants to fund infrastructure investment.

Keywords: Regional investment; fiscal federalism; dynamic panel data (search for similar items in EconPapers)
JEL-codes: C23 H54 H76 H77 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2012-04-12
New Economics Papers: this item is included in nep-geo, nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Does fiscal decentralization foster regional investment in productive infrastructure? (2013)
Working Paper: Does Fiscal Decentralisation Foster Regional Investment in Productive Infrastructure? (2012)
Working Paper: Does fiscal decentralisation foster regional investment in productive infrastructure? (2012)
Working Paper: Does fiscal decentralization foster regional investment in productive infrastructure? (2012)
Working Paper: Does fiscal decentralization foster regional investment in productive infrastructure? (2012)
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