Fiscal federalism in Western European and selected other countries: centralization or decentralization? What is better for economic growth?

Arbeitspapier

Following a brief review of the theoretical literature on the benefits and shortcomings of fiscal decentralization this paper presents an empirical analysis of the relationship between per capita economic growth and its production function determinants, on the one hand, and constructed indicators of fiscal decentralization, on the other hand. The analysis suggests for high income countries, in particular Western European countries, a hump-shaped relation between per capita economic growth and capital formation, on the one hand, and fiscal decentralization, on the other hand. By contrast, for countries with middle income, the association between fiscal decentralization and economic growth and its determinants (capital formation and total factor productivity growth) becomes stronger as fiscal decentralization increases.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 224

Classification and Topics

• Classification: Wirtschaft ; Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models ; Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence ; Intergovernmental Relations; Federalism; Secession
• Subject: Finanzföderalismus ; Wirtschaftswachstum ; Investition ; Produktivität ; Schätzung ; Westeuropa

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Thießen, Ulrich
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2000

Further information

• Handle: http://hdl.handle.net/10419/18209
• Last update: 10.03.2025, 11:43 AM CET