Fiscal decentralization and the size of government: A European country empirical analysis

Public Choice

Volumn 143, Issue 1, 2010, Pages 173-189

  Cassette, Aurélie ^a   Paty, Sonia ^a,b  

^a UNIV LILLE   (France)

^b UNIVERSITÉ DE CAEN   (France)

Author keywords

Cointegration; Dynamic panel; Error correction model; European countries; Fiscal decentralization; Government size

Indexed keywords

EID: 77949918056     PISSN: 00485829     EISSN: None     Source Type: Journal    
DOI: 10.1007/s11127-009-9496-x     Document Type: Article

References (56)

1. Arellano, M., & Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Review of Economic Studies, 58, 277-297.
2. Ashworth, J., Galli, E., & Padovano, F. (2008). Decentralization as a constraint to Leviathan: a panel cointegration analysis. Mimeo.
3. Backhaus, J. G., & Wagner, R. E. (2004). Handbook of public finance. Dordrecht: Kluwer Academic.
4. Banerjee, A., Dolado, J., Galbraith, J. W., & Hendry, D. (1993). Cointegration, error-correction, and the econometric analysis of non-stationary data. London: Oxford University Press.
5. Banerjee, A., Dolado, J., & Mestre, R. (1998). Error-correction mechanism tests for cointegration in a single-equation framework. Journal of Time Series Analysis, 19, 267-283.
6. Blundell, R. W., & Bond, S. R. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87, 115-143.
7. Bond, S. R., Elston, J., Mairesse, J., & Mulkay, B. (1997). Financial factors and investment in Belgium, France, Germany and the UK: a comparison using company panel data (NBER Working Paper). NBER, Cambridge, MA.
8. Bond, S. R., Harhoff, D., & Reenen, J. V. (1999). Investment, R& D, and financial constraints in Britain and Germany. Mimeo, Institute for Fiscal Studies, London.
9. Brennan, G., & Buchanan, J. (1980). The power to tax: analytical foundations of a fiscal constitution. Cambridge: Cambridge University Press.
10. Buettner, T. (2001). Local capital income taxation and competition for capital: the choice of the tax rate. Regional Science and Urban Economics, 31, 215-245.
11. Devereux, M. P., Lockwood, B., & Redoano, M. (2008). Do countries compete over corporate tax rates? Journal of Public Economics, 92(5-6), 1210-1235.
12. Ebel, R. D., & Yilmaz, S. (2002). Concept of fiscal decentralization and worldwide overview. World Bank Institute.
13. Edhaie, J. (1994). Fiscal decentralization and the size of government, an extension with evidence from cross-country data (Policy Research Working paper, 1387). World Bank.
14. Feld, L. P., Kirchgassnner, G., & Schaltegger, C. A. (2003). Decentralized taxation and the size of governement: evidence from Swiss States and local governments (CESifo Working Paper 1087).
15. Ferris, J. S., & West, E. G. (1996). Testing theories of real government size: US experience, 1959-1989. Southern Economic Journal, 62, 537-553.
16. Figlio, D. N., Kolpin, V. W., & Reid, W. E. (1999). Do states play welfare games? Journal of Urban Economics, 46, 437-454.
17. Fiva, J. H. (2006). New evidence on fiscal decentralization and the size of government. FinanzArchiv, 62(2), 250-280.
18. Flowers, M. R. (1988). Shared tax sources in Leviathan model of federalism. Public Finance Quaterly, 16, 67-77.
19. Grossman, P. (1989). Fiscal decentralization and government size: an extension. Public Choice, 62, 63-69.
20. Gwartney, J., & Lawson, R. (2008). Economic freedom of the World (Annual Report). Fraser Institute.
21. Heil, J. B. (1991). The search for Leviathan revisited. Public Finance Quarterly, 19, 334-346.
22. Heyndels, B., & Vuchelen, J. (1998). Tax mimicking among Belgian municipalities. National Tax Journal, 51, 89-101.
23. Jin, J., & Zou, H. (2002). How does fiscal decentralization affect aggregate, national, and subnational government size? Journal of Urban Economics, 52, 270-293.
24. Kau, J. B., & Rubin, P. H. (1981). The size of government. Public Choice, 37, 261-274.
25. Keen, M. (1995). Pursuing Leviathan: fiscal federalism and tax competition. Mimeo.
26. Keen, M., & Kotsogiannis, C. (2004). Federal tax competition and the welfare consequences of decentralization. Journal of Urban Economics, 56, 397-407.
27. Kelejian, H. H., & Robinson, D. P. (1993). A suggested method of estimation for spatial interdependent models with autocorrelated errors, and an application to a county expenditure model. Papers in Regional Science, 72, 297-312.
28. Kelejian, H. H., & Prucha, I. (1998). A generalized spatial two stage least squares procedures for estimating a spatial autoregressive model with autoregressive disturbances. Journal of Real Estate Finance and Economics, 17, 99-121.
29. Kiviet, J. F. (1995). On bias, inconsistency and efficiency of various estimators in dynamic panel data models. Journal of Econometrics, 68, 53-78.
30. Ladd, H. F. (1992). Mimicking of local tax burdens among neighbouring countries. Public Finance Quarterly, 20(4), 450-467.
31. Mairesse, J., Hall, B. H., & Mulkay, B. (1999). Firm-level investment in France and the United States: an exploration of what we have learned in twenty years. Annales d'Economie et de Statistiques, 55-56, 27-67.
32. Meloche, J. P., Vaillancourt, F., & Yilmaz, S. (2004). Decentralization or fiscal autonomy? What does really matter? (Policy Research Paper 3254). World Bank, Washington DC.
33. Oates, W. E. (1972). Fiscal federalism. San Diego: Harcourt Brace Jovanovich.
34. Oates, W. E. (1985). Searching for Leviathan: an empirical study. American Economic Review, 75, 748-757.
35. OECD (1999). Taxing powers of state and local government. OECD Tax Policy Studies, No. 1, Paris.
36. OECD (2001). Tax and the economy: a comparative assessment of OECD countries. OECD Tax Policy Studies, No. 6, Paris.
37. OECD (2002a). Fiscal decentralization in EU applicant states and selected EU member states. Report prepared for the workshop on "Decentralization: trends, perspective and issues at the threshold of EU enlargement", Denmark, October.
38. OECD (2002b). Fiscal design surveys across levels of governments. OECD Tax Policy Studies, No. 7, Paris.
39. Pedroni, P. (1999). Critical values for cointegration tests in heterogeneous panels with multiple regressors. Oxford Bulletin of Economics and Statistics, 61, 653-670.
40. Pedroni, P. (2000). Fully modified OLS for heterogeneous cointegrated panels. Advances in Econometrics, 15, 93-130.
41. Pedroni, P. (2004). Panel cointegration, asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis. Econometric Theory, 20, 597-625.
42. Persson, T., Roland, G., & Tabellini, G. (2005). Electoral rules and government spending in parliamentary democracies (Levine's Working Paper Archive). UCLA Department of Economics.
43. Redoano, M. (2007). Fiscal interactions among European countries. Does the EU matter? (CESIFO Working Paper, 1952).
44. Revelli, F. (2001). Spatial patterns in local taxation: tax mimicking or error mimicking? Applied Economics, 33, 1101-1107.
45. Rodden, J. (2003). Reviving Leviathan: fiscal federalism and the growth of government. International Organization, 57, 695-729.
46. Rodrik, D. (1998). Why do more open economies have bigger governments? Journal of Political Economy, 106, 997-1032.
47. Shughart, W. F., & Tollison, R. D. (1991). Fiscal federalism and the Laffer curve. Economia Delle Scelte Pubbliche, 9, 21-28.
48. Soto, M. (2007). System GMM estimation with a small number of individuals. Institute for Economic Analysis, Barcelona.
49. Stegarescu, D. (2004). Public sector decentralization: measurement concepts and recent international trends (ZEW Discussion Paper 04-74).
50. Stein, E. (1999). Fiscal decentralization and governement size in Latin America. Journal of Applied Economics, 2(2), 357-391.
51. Tiebout, C. (1956). A pure theory of local expenditures. The Journal of Political Economy, 64, 416-426.
52. Veiga, L. G., & Veiga, F. J. (2007). Political business cycles at the municipal level. Public Choice, 131(1-2), 45-64.
53. World Bank (2000). World development report 1999/2000: entering the 21st Century. New York: Oxford University Press.
54. World Bank (2004). Measuring fiscal decentralization, decentralization and subnational regional economics thematic groups. Data Note, August.
55. Wrede, M. (1996). Vertical and horizontal tax competition: will uncoordinated Leviathans end up on the wrong side of the Laffer curve? FinanzArchiv, 3, 461-479.
56. Yasar, M., Nelson, C. H., & Rejesus, R. M. (2006). The dynamics of exports and productivity at the plant level: a panel data error correction model approach. In B. Baltagi (Ed.), Contributions to economic analysis. Amsterdam: Elsevier.