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An Empirical Analysis of the Relationship between Fiscal Decentralization and the Size of Government

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  • Silvia GOLEM

    (University of Split, Faculty of Economics)

  • Lena MALEŠEVIC PEROVIC

    (University of Split, Faculty of Economics)

Abstract

The goal of this paper is to investigate the relationship between fiscal decentralization and the size of government. Using a pooled mean group estimator, which has rarely been applied in this context, we analyze a set of 23 OECD countries over the period 1970–2008. In contrast to previous studies we use an improved measure of fiscal decentralization, which effectively quantifies the degree of sub-national autonomy. Our results suggest that, in the long run, fiscal decentralization decreases the size of government.

Suggested Citation

  • Silvia GOLEM & Lena MALEŠEVIC PEROVIC, 2014. "An Empirical Analysis of the Relationship between Fiscal Decentralization and the Size of Government," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 64(1), pages 30-58, February.
    • Handle: RePEc:fau:fauart:v:64:y:2014:i:1:p:30-58
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    References listed on IDEAS

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    2. RNuket Kirci Cevik & Sel Dibooglu & Ali M. Kutan, 2016. "Real and Financial Sector Studies in Central and Eastern Europe: A Review," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 66(1), pages 2-31, February.

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    More about this item

    Keywords

    fiscal decentralization; government size; pooled mean group;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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