Does Fiscal Decentralization Result in a Better Business Climate?

14 Pages Posted: 25 Jan 2013

See all articles by Russell S. Sobel

Russell S. Sobel

The Citadel - School of Business

Nabamita Dutta

University of Wisconsin, La Crosse

Sanjukta Roy

World Bank

Multiple version iconThere are 3 versions of this paper

Date Written: 2012

Abstract

Previous literature generally finds that greater fiscal decentralization is associated with faster economic growth, improved government performance, and stronger constraints on the Leviathan behavior of governments. Because economic growth critically depends on the presence of good government policies and institutions, the likely but untested link between these strands of literature is that greater decentralization probably improves growth because it results in government policies more conducive to entrepreneurship and business success. We test (and confirm) this hypothesis using several business climate measures for the U.S. states.

Keywords: Decentralization, Fiscal Federalism, Business Climate, Growth

JEL Classification: H2, H7, O1

Suggested Citation

Sobel, Russell S. and Dutta, Nabamita and Roy, Sanjukta, Does Fiscal Decentralization Result in a Better Business Climate? (2012). Applied Economics Letters, Vol. 20, No. 1, 2013. Available at SSRN: https://ssrn.com/abstract=2206595

Russell S. Sobel

The Citadel - School of Business ( email )

171 Moultrie St.
Charleston, SC 29409
United States

Nabamita Dutta (Contact Author)

University of Wisconsin, La Crosse ( email )

Dept. of Economics, 1725 State Street
La Crosse, WI 54601
United States
6087855294 (Phone)

Sanjukta Roy

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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