FISCAL DECENTRALIZATION, MACROSTABILITY AND GROWTH

Jorge Martinez-Vazquez () and Robert McNab ()

Working Papers from Instituto de Estudios Fiscales

Abstract: This paper examines how fiscal decentralization may influence economic growth. Previous research on this question has primarily focused on the direct relationship between decentralization and growth. In this paper, we also incorporate the potential indirect influence of decentralization on growth through its impact on macroeconomic stability. We build an augmented neoclassical model of economic growth that allows for both the direct and indirect effects of fiscal decentralization on economic growth. Using panel data, we find that decentralization appears to reduce the rate of inflation in the sample countries, does not appear to directly influence economic growth, and has an indirect, positive effect on growth through its positive influence on macroeconomic stability. An important contribution of the paper is to identify the role of the indirect effects of fiscal decentralization on economic growth.

Keywords: Fiscal Decentralization; Economic Growth; Macroeconomic Stability. (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
http://www.ief.es/documentos/recursos/publicaciones/papeles_trabajo/2003_11.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to www.ief.es:443 (Bad file descriptor) (http://www.ief.es/documentos/recursos/publicaciones/papeles_trabajo/2003_11.pdf [302 Moved Temporarily]--> https://www.ief.es/documentos/recursos/publicaciones/papeles_trabajo/2003_11.pdf)

Related works:
Journal Article: Fiscal decentralization, macrostability and growth (2006)
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:hpe:wpaper:y:2003:i:11

Access Statistics for this paper

More papers in Working Papers from Instituto de Estudios Fiscales Contact information at EDIRC.
Bibliographic data for series maintained by Miguel Gómez de Antonio ().