Fiscal Decentralization and Economic Growth in OECD Countries
Thushyanthan Baskaran and
Lars Feld
Public Finance Review, 2013, vol. 41, issue 4, 421-445
Abstract:
We study the effect of fiscal decentralization on economic growth for twenty-three Organisation for Economic Co-operation and Development countries from 1975 to 2008. In order to proxy fiscal decentralization, we use both traditional Government Finance Statistics (GFS)–style measures and new measures that account for the degree of subnational tax autonomy. The regressions with GFS–style measures indicate that fiscal decentralization has a negative but statistically insignificant effect on growth. Regressions with the new measures also result in negative coefficient estimates. However, they are larger in absolute terms and statistically significant. For the empirical literature on fiscal federalism, these results imply that measures of fiscal decentralization that account for subnational tax autonomy should be preferred to traditional GFS-style measures. From a policy perspective, we conclude that policy makers should be aware of the economic trade-offs when pursuing reforms toward more fiscal decentralization.
Keywords: fiscal federalism; subnational tax autonomy; tax competition; economic growth (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (76)
Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/1091142112463726 (text/html)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:41:y:2013:i:4:p:421-445
DOI: 10.1177/1091142112463726
Access Statistics for this article
More articles in Public Finance Review
Bibliographic data for series maintained by SAGE Publications ().