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Essays on Asymmetric Federalism

Libman, Alexander (2009): Essays on Asymmetric Federalism.

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The growing research on fiscal and political federalism in economics (as well as rational choice political science) basically shares two main assumptions regarding federal institutions: it takes democratic and symmetric federations as the reference point. Democracy means that the decision making is based on elections and/or referenda, which effectively constraint the actions of politicians. Symmetry means that the ”degree of devolution” for all regions is identical. In particular, if both federal and regional budgets are funded by a common split tax, the de-jure retention rate is identical for all states. It goes without saying that there is a multitude of models looking at economic asymmetry between regions: most federations include states or regions with significantly different economic potential, population and territory, obviously influencing both their comparative economic performance and their behavior in the federal bargaining. However, the economic asymmetry does not (necessarily) provide an identity mapping into the asymmetric devolution in terms of formal institutions and informal policy making (what I refer to as ”asymmetric federation” in this paper): this issue requires careful analysis.

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