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The (non)impact of revenue decentralization on fiscal deficits: some evidence from OECD countries

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  • John Thornton

Abstract

Recent studies examining the relation between fiscal decentralization and consolidated government fiscal balances generally have not taken proper account of the extent of the independent taxing powers available to sub-national governments and thus have overstated the degree of effective revenue decentralization. Results from a panel regression study of 19 OECD member countries suggest that when the measure of fiscal decentralization is limited to the revenues over which sub-national governments have full autonomy, its impact on fiscal balances is not statistically significant. Accordingly, when accurately measured revenue decentralization appears to have had no negative impact on fiscal discipline.

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  • John Thornton, 2009. "The (non)impact of revenue decentralization on fiscal deficits: some evidence from OECD countries," Applied Economics Letters, Taylor & Francis Journals, vol. 16(14), pages 1461-1466.
    • Handle: RePEc:taf:apeclt:v:16:y:2009:i:14:p:1461-1466
    DOI: 10.1080/13504850701564298
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    References listed on IDEAS

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    1. Julia Darby & Muscatelli Anton & Graeme Roy, 2004. "Fiscal Federalism, Fiscal Consolidations and Cuts in Central Government Grants: Evidence from an Event Study," ERSA conference papers ersa04p366, European Regional Science Association.
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    Cited by:

    1. Grażyna Bukowska & Joanna Siwińska-Gorzelak, 2016. "Can fiscal decentralisation curb fiscal imbalances?," Working Papers 2016-35, Faculty of Economic Sciences, University of Warsaw.
    2. Mr. Luc Eyraud & Ms. Anita Tuladhar & Mr. Julio Escolano & Ms. Marialuz Moreno Badia & Ms. Juliane Sarnes, 2012. "Fiscal Performance, Institutional Design and Decentralization in European Union Countries," IMF Working Papers 2012/045, International Monetary Fund.
    3. David Bartolini & Agnese Sacchi & Simone Salotti & Raffaella Santolini, 2018. "Fiscal Decentralization in Times of Financial Crises," CESifo Economic Studies, CESifo Group, vol. 64(3), pages 456-488.
    4. Jorge Martinez-Vazquez & Santiago Lago-Peñas & Agnese Sacchi, 2017. "The Impact Of Fiscal Decentralization: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 31(4), pages 1095-1129, September.
    5. David Cantarero & Patricio Perez, 2012. "Decentralization and regional government size in Spain," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 11(3), pages 211-237, December.
    6. Leonardo Letelier S. & Héctor Ormeño, 2018. "El mapa de la descentralización fiscal en Chile," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 21(3), pages 004-040, December.
    7. Siniša Mali & Lenka MaliCká, 2023. "Impact of Fiscal Decentralization on Fiscal Stance in EU: Real Deal or Econometric Illusion?," Hacienda Pública Española / Review of Public Economics, IEF, vol. 246(3), pages 71-99, September.
    8. Alessandra Cepparulo & Luisa Giuriato, 2022. "The residential healthcare for the elderly in Italy: some considerations for post-COVID-19 policies," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 23(4), pages 671-685, June.
    9. Makreshanska, Suzana & Petrevski, Goran, 2015. "Fiscal Decentralization and Inflation in Central and Eastern Europe," MPRA Paper 77596, University Library of Munich, Germany, revised 16 Mar 2017.

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