Revisiting the Link between Growth and Federalism: A Bayesian Model Averaging Approach

Zareh Asatryan and Lars Feld

No 4357, CESifo Working Paper Series from CESifo

Abstract: Following the ambiguous results in the literature aimed at understanding the empirical link between fiscal federalism and economic growth, this paper revisits the question using a Bayesian Model Averaging approach. The analysis suggests that the failure to appropriately account for model uncertainty may have previously led to biased estimates. The results from a sample of 23 OECD countries over 1975-2000 indicate that after controlling for unobserved country heterogeneity, there is no robust link, neither positive, nor negative, between output growth and fiscal federalism (measured as sub-national governments’ share of own source tax revenue).

Keywords: fiscal federalism; economic growth; Bayesian Model Averaging (search for similar items in EconPapers)
JEL-codes: C11 H70 O43 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Revisiting the link between growth and federalism: A Bayesian model averaging approach (2015)
Working Paper: Revisiting the link between growth and federalism: A Bayesian model averaging approach (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_4357

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