Sub-national political regimes and asymmetric fiscal decentralization

Alexander Libman ()

Constitutional Political Economy, 2012, vol. 23, issue 4, 302-336

Abstract: This paper develops a model to explain how sub-national political regimes affect the variation in retention rates in a country in which a region and a central government bilaterally bargain over the distribution of tax revenue given a particular tax rate (and thus fiscal decentralization is asymmetric). This study examines cases in which both sub-national and national governments have the same political regime (democracies and non-democracies) and situations in which the central and regional political regimes differ. This article shows that in the latter case, regions receive a smaller share of tax revenue for a broad set of parameters of the model (as opposed to the case of a pure non-democracy); in the case of identical political regimes, the comparative fiscal decentralization is determined by the productivity-enhancing effect of regional public goods. Copyright Springer Science + Business Media, LLC 2012

Keywords: Fiscal decentralization; Retention rates; Sub-national political regimes; D73; H11; H77 (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1007/s10602-012-9126-3

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