On the Link Between Fiscal Decentralization and Public Debt in OECD Countries

Thushyanthan Baskaran

MPRA Paper from University Library of Munich, Germany

Abstract: Excessive borrowing by subnational governments is considered to be one of the perils of fiscal decentralization. On the other hand, fiscal decentralization might ensure the scal stability of the public sector by constraining Leviathan governments. Since the impact of decentralized government on fiscal outcomes is therefore ambiguous from a theoretical perspective, we explore this question empirically with a panel of 17 OECD countries over the 1975-2001 period. Our findings suggest that expenditure decentralization signicantly reduces public indebtedness, whereas tax decentralization and vertical fiscal imbalances are insignicant.

Keywords: Fiscal decentralization; Public debt; Soft budget constraints (search for similar items in EconPapers)
JEL-codes: H77 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (54)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/21599/1/MPRA_paper_21599.pdf original version (application/pdf)

Related works:
Journal Article: On the link between fiscal decentralization and public debt in OECD countries (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:21599

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().