Fiscal federalism and economic performance new evidence from Switzerland

Heiko Burret (), Lars Feld and Christoph Schaltegger

European Journal of Political Economy, 2022, vol. 74, issue C

Abstract: The link between fiscal federalism and economic performance is still ambiguous. Aiming at clarification, we improve on a widespread shortcoming by measuring fiscal federalism not just by one variable but by various institutions that constitute it. To this end, Switzerland provides for a laboratory as its 26 cantons share a common framework, while the extent of fiscal federalism varies between cantons and across time. By exploiting this setting, a two-way fixed-effects approach provides evidence for the expected heterogeneity: The impact of fiscal federalism on economic performance differs conditional on the federal instrument considered. Overall, instruments of competitive federalism appear to improve economic performance of the cantons, while for cooperative elements the effects are not unambiguously identified.

Keywords: Fiscal federalism; Economic growth; Fiscal competition; Fiscal equalization (search for similar items in EconPapers)
JEL-codes: H73 H77 O43 O47 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Fiscal federalism and economic performance: New evidence from Switzerland (2021)
Working Paper: Fiscal Federalism and Economic Performance - New Evidence from Switzerland (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:74:y:2022:i:c:s0176268021001300

DOI: 10.1016/j.ejpoleco.2021.102159

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