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Fiscal Decentralization and Public Spending: Evidence from Heteroscedasticity-Based Identification

Herwartz Helmut () and Bernd Theilen ()
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Herwartz Helmut: Department of Economics, Georg-August-University, Göttingen, Germany

The B.E. Journal of Economic Analysis & Policy, 2017, vol. 17, issue 2, 8

Abstract: We analyse the instantaneous relation between public spending and expenditure decentralization by means of a novel identification scheme suggested in Lewbel (2012). Our cointegration, error-correction approach indicates that expenditure decentralization impacts negatively on total public spending and most of its subcategories.

Keywords: Fiscal decentralization; public spending; government ideology; endogeneity; heteroscedasticity-based identification (search for similar items in EconPapers)
JEL-codes: H41 H50 H72 H77 (search for similar items in EconPapers)
Date: 2017
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