Baskaran, Thushyanthan (2010): On the Link Between Fiscal Decentralization and Public Debt in OECD Countries. Forthcoming in: Public Choice (2010)
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Excessive borrowing by subnational governments is considered to be one of the perils of fiscal decentralization. On the other hand, fiscal decentralization might ensure the scal stability of the public sector by constraining Leviathan governments. Since the impact of decentralized government on fiscal outcomes is therefore ambiguous from a theoretical perspective, we explore this question empirically with a panel of 17 OECD countries over the 1975-2001 period. Our findings suggest that expenditure decentralization signicantly reduces public indebtedness, whereas tax decentralization and vertical fiscal imbalances are insignicant.
|Item Type:||MPRA Paper|
|Original Title:||On the Link Between Fiscal Decentralization and Public Debt in OECD Countries|
|English Title:||On the Link Between Fiscal Decentralization and Public Debt in OECD Countries|
|Keywords:||Fiscal decentralization, Public debt, Soft budget constraints|
|Subjects:||H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H77 - Intergovernmental Relations ; Federalism ; Secession|
|Depositing User:||Abdul Hamid|
|Date Deposited:||24. Mar 2010 09:26|
|Last Modified:||30. Dec 2015 20:35|
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