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Fiscal decentralization and deficits: International evidence

Bilin Neyapti ()

European Journal of Political Economy, 2010, vol. 26, issue 2, 155-166

Abstract: This paper investigates macroeconomic effects of fiscal decentralization, which has been a neglected area of research. Panel evidence for 16 countries over 1980-1998 indicates that expenditure and revenue decentralization reduce budget deficits. A principal finding is that the fiscal disciplining effect of fiscal decentralization increases with population size. Interestingly, absence of local elections is associated with greater effectiveness of fiscal decentralization. The benefits of expenditure decentralization decrease with ethnolinguistic fractionalization and quality of governance.

Keywords: Fiscal; decentralization; Budget; deficits (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:26:y:2010:i:2:p:155-166

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