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Composition des budgets publics, (dé)centralisation fiscale, et bien‐être .
Author(s) -
Arcalean Calin,
Glomm Gerhard,
Schiopu Ioana,
Suedekum Jens
Publication year - 2010
Publication title -
canadian journal of economics/revue canadienne d'économique
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.773
H-Index - 69
eISSN - 1540-5982
pISSN - 0008-4085
DOI - 10.1111/j.1540-5982.2010.01597.x
Subject(s) - decentralization , economics , welfare , productivity , fiscal federalism , public expenditure , public spending , macroeconomics , public finance , public economics , market economy , politics , political science , law
We study the optimal degree of fiscal decentralization in a dynamic federal economy where governments decide on budget size and its allocation between public education and infrastructure spending. We find that full centralization of tax and expenditure policies is optimal when infrastructure productivity is similar across regions. When differences are not too large, partial centralization is optimal. With strong differences, full decentralization becomes optimal. National steady‐state output tends to be highest under full decentralization. We provide a justification for the mixed evidence regarding the Oates conjecture by showing that full dominates partial decentralization, despite being inferior to complete decentralization.