The asymmetric nature of fiscal decentralization: theory and practice

Agnese Sacchi and Simone Salotti

MPRA Paper from University Library of Munich, Germany

Abstract: A relevant mismatch between tax and expenditure decentralization characterizes many industrialized countries. The former is usually less pronounced than the latter, resulting in asymmetric fiscal decentralization arrangements. We investigate the nature of this asymmetry using a theoretical framework that explains why it is difficult to tackle it, despite a consensus on the benefits of a well-balanced decentralization process. We find that asymmetry is intrinsic to fiscal decentralization, even in a scenario where clear advantages from well-developed decentralized systems arise. This implies that both empirical and theoretical contributions would benefit by taking into account the welfare-reducing asymmetric nature of fiscal decentralization.

Keywords: Expenditure decentralization; fiscal mismatch; local revenue; tax autonomy (search for similar items in EconPapers)
JEL-codes: H71 H72 H77 (search for similar items in EconPapers)
Date: 2014-02
New Economics Papers: this item is included in nep-pbe
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Citations: View citations in EconPapers (1)

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https://mpra.ub.uni-muenchen.de/57627/8/MPRA_paper_57627.pdf revised version (application/pdf)

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