Browsing by Subject "Fiscal Decentralization"

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Open Access
Fiscal decentralization : a political economy approach
(2013) Aslım, Erkmen Giray
This study presents a theoretical approach to analyze income and welfare implications of fiscal decentralization in a static closed economy model where political factors are taken into account. We provide two alternative Scenarios: in one scenario government acts like a social planner and solves optimally for the level of fiscal decentralization; in the other scenario government is politically oriented and solves for the optimal tax rate. Under both scenarios we obtain non-cooperative solutions resulting from the interactions of the central government with local governments. Comparative statics of the model provide explicit solutions which enable us to derive policy implications. In order to get a better and deeper insight on the model, we also perform calibration and simulation analyses. We observe that benevolent government enhances social welfare whereas Leviathan CG enhances efficiency, measured by effective tax collection.
Open Access
Fiscal decentralization and fiscal discipline
(2006) Çakır, Nida
In this thesis, the effects of fiscal procedures, fiscal centralization and fiscal decentralization, on fiscal discipline are analyzed in a theoretical framework. A model of two optimization problems is established: central government’s optimization problem and local government’s optimization problem representing the two fiscal procedures; fiscal centralization and fiscal decentralization respectively. Comparative static analysis is performed, and moreover ambiguous results are calibrated. Our results indicate that in fiscal decentralization fiscal discipline increases with the number of localities. Furthermore, the portion that goes to the pool of the central government has a positive effect on the size of redistribution in fiscal centralization, but it has a negative effect in fiscal decentralization. Similarly, whereas income tax rate affects the size of redistribution positively in fiscal centralization, it has a negative effect in fiscal decentralization.
Open Access
Fiscal decentralization in Turkey: an empirical assessment of the transfer rule
(2018-06) Özdemir, Begüm
This thesis analyzes whether the fiscal relations between the central and local governments of Turkey can be solely explained by socio-economic and demographic factors or the regional and political positions of cities also affect it. We use a balanced panel dataset consisting of all of the 81 cities of Turkey over the years 2008-2012. Our main dependent variables are transfers and government compensation. We define government compensation as the total government spending made in a city excluding local own revenues. Other fiscal aggregates such as local own revenues and expenditures, or fiscal indicators such as fiscal decentralization and financial independence, defined as the share of local governments spending financed by its own revenues, are also analyzed. Regression analysis and robustness tests showed the following: (i) Socio-economic structure of cities are significantly associated with the amount of transfers and government compensation; which means that the transfer rule of Turkey, as an institutional mechanism, is quite successful addressing regional socio-economic differences. Besides, there is no robust effect of political parties on the amount of transfers and government compensation. (ii) Our analysis also shows that there is a significant association between political parties and local expenditures, revenues, and expenditure decentralization.