Fiscal Decentralization: A Remedy for Corruption?

G. Gulsun Arikan ()
Authors registered in the RePEc Author Service: Guzin Gulsun Akin ()

International Tax and Public Finance, 2004, vol. 11, issue 2, 175-195

Abstract: This paper examines the effect of fiscal decentralization in a country on the level of corruption. Using a tax competition framework with rent-seeking behavior, it is shown theoretically that fiscal decentralization, modeled as an increase in the number of competing jurisdictions, leads to a lower level of corruption. This result is then tested using a small, cross-country data set. The empirical results are not very strong, but they suggest that the hypothesized relationship between decentralization and corruption may indeed exist.

Date: 2004
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