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Fiscal Autonomy and Total Government Expenditure: An Austrian Case-study

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  • Johann Bröthaler
  • Michael Getzner

Abstract

The ongoing debate on the efficiency of a federal system versus a centralized system has lead to a diverse and unclear empirical picture of the effects of fiscal decentralization on public sector growth. For analyzing these effects it is crucial to consider the sub-national decision power on taxing and spending. In the current paper, we test for the effects of fiscal autonomy on total government expenditure using time series from 1955 to 2007 for Austria. Determinants of government expenditure are economic growth, fiscal illusion of policy makers, and the unemployment rate. We additionally account for different degrees of sub-national fiscal autonomy. Our econometric results suggest that the often-hypothesized dampening effects of fiscal autonomy cannot be corroborated for the Austrian system. Copyright International Atlantic Economic Society 2011

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  • Johann Bröthaler & Michael Getzner, 2011. "Fiscal Autonomy and Total Government Expenditure: An Austrian Case-study," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 17(2), pages 134-156, May.
    • Handle: RePEc:kap:iaecre:v:17:y:2011:i:2:p:134-156:10.1007/s11294-011-9301-8
    DOI: 10.1007/s11294-011-9301-8
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    Cited by:

    1. Lars Feld, 2014. "James Buchanan’s theory of federalism: from fiscal equity to the ideal political order," Constitutional Political Economy, Springer, vol. 25(3), pages 231-252, September.
    2. Johann Bröthaler & Michael Getzner & Gottfried Haber, 2015. "Sustainability of local government debt: a case study of Austrian municipalities," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 42(3), pages 521-546, August.
    3. Stephen Moore, 2016. "Wagner in Ireland: An Econometric Analysis," The Economic and Social Review, Economic and Social Studies, vol. 47(1), pages 69-103.
    4. Boukari, Mamadou & Veiga, Francisco José, 2018. "Disentangling political and institutional determinants of budget forecast errors: A comparative approach," Journal of Comparative Economics, Elsevier, vol. 46(4), pages 1030-1045.
    5. Johann Bröthaler & Michael Getzner, 2015. "The Tax-Spend Debate and Budgetary Policy in Austria," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 21(3), pages 299-315, August.
    6. Michael Getzner, 2022. "Socio-economic and spatial determinants of municipal cultural spending," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 46(4), pages 699-722, December.

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    More about this item

    Keywords

    Fiscal autonomy; Decentralization; Federalism; Growth of public sector; Public expenditure; H6; E6; H7;
    All these keywords.

    JEL classification:

    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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