Fiscal Competition, Decentralization, Leviathan, and Growth

Ken Tabata

No 49, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: This paper studies the implications of different fiscal regimes (i.e. centralized vs decentralized) for economic growth and welfare by incorporating Wilson (2005)-type fiscal competition model into a Barro (1990)-type endogenous growth model. We show that fiscal decentralization is more desirable than fiscal centralization for economic growth, when the degree of selfishness of central government bureaucrats is high, and the relative political power of the young to the old is low. We also show that the growth-maximizing fiscal regime is also welfare-maximizing.

Keywords: Fiscal competition; Decentralization; Leviathan; Overlapping generations (search for similar items in EconPapers)
JEL-codes: E62 H71 H72 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2009-11, Revised 2009-11
New Economics Papers: this item is included in nep-dge, nep-fdg, nep-mic, nep-pbe and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:49

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