The free-market view is in general in favour of decentralization. By and large, the rationale behind this claim is that decentralized taxation and spending imply greater accountability for politicians and public officials. In turn, greater accountability generates less corruption and better services to the community. The authors of this paper suggest that this claim needs to be taken with caution, since the quality of the local institutions significantly affects the outcome of fiscal decentralization (spending performance).
Other publications
Fiscal Rules vs. Political Culture as Determinants of Soft Budget Spending Behaviors
Executive Summary
The main purpose of this paper is to investigate whether, and to which extent, the rules introduced by central governments effectively restrain the spending behaviour of the decentralized authorities. In this paper, the authors provide an innovative comparative analysis by considering two countries that share the same degree of economic development and many cultural traits – France and Italy. Yet, these two countries differ in one crucial respect. France has a tradition of strong centralization, bureaucratic discipline and detailed technocratic control on the periphery (the regions). By contrast, Italy is known to follow a more flexible approach, which allows for some negotiation between the central and the peripheral authorities and feeds expectations for assistance and bail-outs, should the regions engage in excessive spending and violate the budgetary rules set by the centre.
This is the expected revenue from the financial transaction tax promoted by the EU. The proposal is expected to come into effect from 1st January 2014 and applies to the transactions carried out by financial institutions (banks, investment firms, insurance undertakings, collective investment undertakings, etc.) acting as party to a transaction, either for their own account or for the account of other persons. Most financial instruments (securities, bonds, etc.) and derivatives thereof (such as options or swaps) will be covered by the tax.
is the drop of tax revenue in the UK compared with January 2011. The natural explanation that comes to mind is the increase of the marginal tax rate from 40…
This is the US debt reduction over the next 10 years claimed in President Obama’s latest budget proposal. After careful examination of this amount it appears nevertheless that the spending…
Executive Summary
The current crisis includes two components: high indebtedness and low growth. No easy solution is in sight, since policy-makers are currently facing a double bind, since they need extra cash from the taxpayers and also lighter taxation in order to encourage entrepreneurship, the key ingredient in economic growth.
is the amount of exposition of French banks to European countries’ private and public debt. They own for instance $106 billion of Italian public debt (which is six times higher…
This is the annual cost of one percentage point increase of the interest rates on French government bonds, according to the credit rating agency Moody’s. France is currently facing 2%…
Germany has raised over a quarter of its total EFSF obligation of €211 billion by way of what is essentially magic. The Telegraph reports that “Germany is €55bn richer than…
is the number of new regulatory actions in the works in the United States. Even before those 4,257 new regulations go into effect, the Federal Register shows more than 81,000…