Revisiting the Link between Growth and Federalism: A Bayesian Model Averaging Approach

20 Pages Posted: 29 Aug 2013

See all articles by Zareh Asatryan

Zareh Asatryan

ZEW – Leibniz Centre for European Economic Research; University of Freiburg

Lars P. Feld

Walter Eucken Institute

Multiple version iconThere are 2 versions of this paper

Date Written: August 28, 2013

Abstract

Following the ambiguous results in the literature aimed at understanding the empirical link between fiscal federalism and economic growth, this paper revisits the question using a Bayesian Model Averaging approach. The analysis suggests that the failure to appropriately account for model uncertainty may have previously led to biased estimates. The results from a sample of 23 OECD countries over 1975-2000 indicate that after controlling for unobserved country heterogeneity, there is no robust link, neither positive, nor negative, between output growth and fiscal federalism (measured as sub-national governments’ share of own source tax revenue).

Keywords: fiscal federalism, economic growth, Bayesian Model Averaging

JEL Classification: C110, H700, O430

Suggested Citation

Asatryan, Zareh and Feld, Lars P., Revisiting the Link between Growth and Federalism: A Bayesian Model Averaging Approach (August 28, 2013). CESifo Working Paper Series No. 4357, Available at SSRN: https://ssrn.com/abstract=2317218

Zareh Asatryan (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

L7
1
Mannheim, 68161
Germany

University of Freiburg ( email )

Albert-Ludwigs-Universität Freiburg, Wirtscha.inf.
Kollegiengebäude II, Platz der Alten Synagoge
Freiburg im Breisgau, 79098
Germany

Lars P. Feld

Walter Eucken Institute ( email )

Goethestrasse 10
Freiburg im Breisgau, Baden-Württemberg D-79100
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
31
Abstract Views
329
PlumX Metrics