 Fiscal Federalism, Collusion, and Government Size: Evidence from the StatesPublic Finance Review, 1999, vol. 27, issue 3, 262-281 Abstract: This study uses a state-level panel data set (1979-1992), encompassing all levels of government, to test the applicability of three theories concerning government size-the Wallis and Brennan/Buchanan versions of the decentralization hypothesis and the Brennan/Buchanan collusion hypothesis-to determine which one or ones should be used when modeling the public sector in the United States. The results indicate that as fiscal decentralization increases, state and local public expenditures increase and federal government expenditures decrease, as theorized by Wallis, whereas total government spending decreases, as predicted by Brennan and Buchanan. It is also shown that collusion among the different levels of government leads to an increase in overall government spending and an increase in spending at each individual level of government-evidence supporting the Brennan/Buchanan collusion hypothesis. Thus, this study shows that collusion among the different levels of government weakens the disciplining power of fiscal federalism. Therefore, fiscal decentralization alone may not act as a binding constraint on Leviathan type governments. Accordingly, it is concluded that each theory contributes to the explanation of public sector size, implying that each should be taken into consideration when modeling the public sector in the United States. Date: 1999 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:27:y:1999:i:3:p:262-281 DOI: 10.1177/109114219902700302 Access Statistics for this article More articles in Public Finance Review |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.