Fiscal Decentralization and Deficits: International Evidence
Please cite this item using this persistent URLhttp://hdl.handle.net/11693/11872
European Journal of Political Economy
- Department of Economics 
This paper investigates macroeconomic effects of fiscal decentralization, which has been a neglected area of research. Panel evidence for 16 countries over 1980-1998 indicates that expenditure and revenue decentralization reduce budget deficits. A principal finding is that the fiscal disciplining effect of fiscal decentralization increases with population size. Interestingly, absence of local elections is associated with greater effectiveness of fiscal decentralization. The benefits of expenditure decentralization decrease with ethnolinguistic fractionalization and quality of governance. (C) 2010 Elsevier B.V. All rights reserved.
Neyapti, B. (2010). Fiscal decentralization and deficits: International evidence. European Journal of Political Economy, 26(2), 155-166.