A Comprehensive Analysis of Expenditure Decentralization and of the Composition of Local Public Spending

Agnese Sacchi and Simone Salotti

Regional Studies, 2016, vol. 50, issue 1, 93-109

Abstract: S acchi A. and S alotti S. A comprehensive analysis of expenditure decentralization and of the composition of local public spending, Regional Studies . Many industrialized countries have recently implemented fiscal decentralization reforms assigning more spending responsibility to sub-national governments. This paper investigates the causes of the decentralization of different categories of public expenditure in 19 developed countries over the period 1980-2006. Different models for each of the spending functions under analysis are estimated adopting a general-to-specific empirical approach. Results confirm existing findings on the negative link between regional income disparities and expenditure decentralization. A similarly negative relationship is found for a set of demographic variables, leading to the conclusion that macroeconomic and, more importantly, political factors are responsible for the recent increase in decentralization. Finally, the analysis is completed by a study of the factors driving sub-national expenditure composition, with political and demographic changes emerging as the most important determinants.

Date: 2016
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Working Paper: A comprehensive anlysis of expenditure decentralization and of the composition of local public spending (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:taf:regstd:v:50:y:2016:i:1:p:93-109

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DOI: 10.1080/00343404.2014.893387

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