Fiscal Decentralization and Economic Growth in OECD Countries: Is there a Relationship?

Thushyanthan Baskaran and Lars Feld

No 2721, CESifo Working Paper Series from CESifo

Abstract: We study the relationship between fiscal decentralization and economic growth for 23 OECD countries from 1975 to 2001 by using new panel data on sub-federal tax autonomy. While initial estimations suggest that fiscal decentralization causes lower growth rates, we find that this result is not robust to alternative specifications. We also fail to obtain evidence for a negative relationship in a number of additional robustness checks. We thus conclude that fiscal decentralization is unrelated to economic growth.

Keywords: fiscal federalism; sub-national fiscal autonomy; tax competition (search for similar items in EconPapers)
JEL-codes: D78 H71 H73 H77 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (26)

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