Fiscal Decentralization and Financial Condition

Although there are strong theoretical arguments about both the benefits and costs of decentralization in the federalism literature, there is little on how second-order fiscal decentralization effects the financial health of state governments. This study examines this question and adds to the underst...

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Bibliographic Details
Published in:State & local government review 2018-06, Vol.50 (2), p.119-131
Main Authors: Singla Akheil, Stone, Samuel B
Format: Article
Language:English
Subjects:
Cost benefit analysis
Decentralization
Expenditures
Federalism
Health care policy
Public finance
Revenue
State-local relations
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Summary:Although there are strong theoretical arguments about both the benefits and costs of decentralization in the federalism literature, there is little on how second-order fiscal decentralization effects the financial health of state governments. This study examines this question and adds to the understanding of state-and-local fiscal relations. Using financial indicators that measure several dimensions of financial condition, the research estimates the effect of revenue and expenditure decentralization on state fiscal health. It finds that while state financial condition is unaffected by revenue decentralization, there is a curvilinear relationship between expenditure decentralization and long-term state financial condition.
ISSN:0160-323X
1943-3409
DOI:10.1177/0160323X18794014