Fiscal Federalism and Long-Run Macroeconomic Performance: A Survey of Recent Research
30 Pages Posted: 7 Mar 2010
Date Written: March 7, 2010
In this paper, we offer both a broad survey of the literature on fiscal federalism and long-run economic performance, and a detailed report of some of our own recent studies in this field. We look at the difference between study types (cross-country versus single-country studies), and at the relevance of the broader institutional framework into which fiscal decentralization is embedded. We also look into structural change and intergovernmental transfers as a detailed mechanism through which federalism may have an impact on aggregate economic performance. It turns out that fiscal decentralization has no robust effect on growth, but the evidence hints at a positive effect on overall productivity, conditional on the broader institutional framework.
Keywords: Fiscal Federalism, Fiscal Competition, Economic Growth, Economic Performance
JEL Classification: H70, E63, E65
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