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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/25922
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| Title: | | Why do differences in the degree of fiscal decentralization endure?  |
| Authors: | | Calsamiglia, Xavier Garcia-Milà, Teresa McGuire, Therese J. |
| Issue Date: | | 2006 |
| Series/Report no.: | | CESifo working paper 1877 |
| Abstract: | | Differences in the degree of fiscal decentralization observed between the U.S. and many countries in Europe cannot be explained within the standard theory of fiscal decentralization. By introducing preferences for solidarity equality in the provision of public goods and services across regions we show that different decentralization schemes can coexist as efficient choices. We develop a model of fiscal decentralization that incorporates tastes for solidarity, multiple levels of government, and various tax and transfer instruments. We find that when solidarity is added to the traditional fiscal-federalism framework, the choice along the decentralized-to-centralized spectrum shifts toward a more centralized system. |
| JEL: | | H2 H4 H7 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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