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Fiscal decentralization, ideology, and the size of the public sector

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  • Baskaran, T.

Abstract

No consensus has yet emerged on whether fiscal decentralization facilitates or impedes the growth of the public sector. One explanation for this ambiguity in the literature is that the effect of fiscal decentralization on public sector size depends on the government’s ideology. This paper therefore develops a simple model to study theoretically how interactions between fiscal decentralization and the ideology of the government may influence the size of the public sector. Thereafter, the implications of the model are tested empirically with panel data from 18 OECD countries over the 1980-2000 period.

Suggested Citation

  • Baskaran, T., 2009. "Fiscal decentralization, ideology, and the size of the public sector," MPRA Paper 30188, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:30188
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    More about this item

    Keywords

    Electoral competition; Fiscal decentralization; Public sector size;
    All these keywords.

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

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