Fiscal Decentralisation and Government Size: Evidence from a Panel of European Countries

This paper provides empirical evidence on the association between fiscal decentralisation and government size on a sample of 28 European countries during 1990-2016. The main findings from our study are as follows: first, expenditure decentralisation is associated with smaller government size; second...

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Bibliographic Details
Published in:Hacienda pública española 2019-01, Vol.229 (2), p.33-58
Main Authors: Makreshanska-Mladenovska, Suzana, Petrevski, Goran
Format: Magazinearticle
Language:English
Subjects:
Accountability
Central government
Decentralization
Economic development
Expenditures
Finance
Government
Government spending
Hypotheses
Investigations
Political systems
Politics
Revenue sharing
Studies
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Summary:This paper provides empirical evidence on the association between fiscal decentralisation and government size on a sample of 28 European countries during 1990-2016. The main findings from our study are as follows: first, expenditure decentralisation is associated with smaller government size; second, revenue decentralisation has negative effect on government size only in the sub-sample of Central and Eastern European countries; third, we cannot provide empirical support to the common-pool hypothesis, implying that it is expenditure decentralisation that matters for the size of general government notwithstanding how sub-national governments finance their expenditure.
ISSN:0210-1173
2386-4176
DOI:10.7866/hpe-rpe.19.2.2