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The Institutions of Fiscal Federalism

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  • Jason Sorens

Abstract

Federal and decentralized political systems vary in the extent to which sub-central governments enjoy policy authority, political independence from the center, and taxation powers. The institutionalist view of fiscal federalism holds that sub-central governments' fiscal powers are meaningful and self-enforcing only when the central government cannot undermine regional authority. Most recent empirical research on fiscal federalism has ignored the institutional foundations of the system, with adverse consequences for measurement and interpretation. A new, institutional measure of fiscal federalism is proposed. Cross-national tests using this measure for thirty-nine democracies find that more fiscally federal countries, especially those with many competing jurisdictions, have smaller government consumption and government share of gross domestic product, while expenditure decentralization increases government size, findings consistent with widely accepted institutionalist theories. Copyright 2011, Oxford University Press.

Suggested Citation

  • Jason Sorens, 2011. "The Institutions of Fiscal Federalism," Publius: The Journal of Federalism, CSF Associates Inc., vol. 41(2), pages 207-231, Spring.
  • Handle: RePEc:oup:publus:v:41:y:2011:i:2:p:207-231
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    File URL: http://hdl.handle.net/10.1093/publius/pjq016
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    Cited by:

    1. Thushyanthan Baskaran, 2012. "Tax Decentralization and Public Deficits in OECD Countries," Publius: The Journal of Federalism, CSF Associates Inc., vol. 42(4), pages 688-707, October.
    2. Lisa Gianmoena & Vicente Rios, 2018. "The Determinants of Resilience in European Regions During the Great Recession: a Bayesian Model Averaging Approach," Discussion Papers 2018/235, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    3. Jason Sorens, 2014. "Fiscal federalism, jurisdictional competition, and the size of government," Constitutional Political Economy, Springer, vol. 25(4), pages 354-375, December.
    4. Norman Gemmell & Richard Kneller & Ismael Sanz, 2013. "Fiscal Decentralization And Economic Growth: Spending Versus Revenue Decentralization," Economic Inquiry, Western Economic Association International, vol. 51(4), pages 1915-1931, October.
    5. Umut Ozkan & Stephan Schott, 2013. "Sustainable Development and Capabilities for the Polar Region," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 114(3), pages 1259-1283, December.
    6. Austin M Aldag & Mildred E Warner & Yunji Kim, 2019. "Leviathan or Public Steward? Evidence on Local Government Taxing Behavior from New York State," Publius: The Journal of Federalism, CSF Associates Inc., vol. 49(4), pages 671-693.
    7. Schaltegger Christoph A. & Winistörfer Marc M., 2014. "Zur Begrenzung der schleichenden Zentralisierung im Schweizerischen Bundesstaat / On government centralization and its limitation in Switzerland," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 65(1), pages 183-228, January.

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