— This essay contributes to second generation fiscal federalism (SGFF), which traces the implications of incentives created by political and fiscal institutions. The approach explores how various forms of fiscal federalism work in the presence of political officials who, rather than being benevolent social planners, face various forms of political incentives. The paper focuses on three sets of ...

This paper studies the choice between centralization and decentralization of fiscal policy in a political economy setting. With centralization, regional delegates vote over agendas comprising sets of regionspecific projects. The outcome is inefficient because the choice of projects is insufficiently sensitive to within-region benefits. The number of projects funded may be non-monotonic in the s...

Libman, Alexander—Constitutions, regulations, and taxes: Contradictions of different aspects of decentralization The paper confronts different aspects of decentralization: fiscal decentralization, post-constitutional regulatory decentralization, and constitutional decentralization – using a single dataset from the Russian Federation of the Yeltsin period as a politically asymmetric country and ...

The relationship between decentralization of government activities and the extent of rent extraction by private parties is an important element in the recent debate on institutional design. The theoretical literature makes ambiguous predictions about this relationship, and it has remained virtually unexamined by empiricists. In this paper, we make a first attempt at examining this issue empiric...

This paper examines the country specific effect of policy reform on infrastructure spending in China and India. In China we have examined how marketization and decentralization has affected the composition of provincial public expenditure and in the case of India we have examined the impact of fiscal reforms on sub-national infrastructure spending. It is observed that in China with a lower mark...

Does fiscal decentralization lead to more efficient governance, better public goods, and higher economic growth? This paper tests hypotheses of the theoretical literature that results of decentralization depend on features of political institutions. Using data from up to 95 countries for 25 years we show that the effect of fiscal decentralization strongly depends on two aspects of political cen...

The search for “fiscal indicators” to provide a short-hand (and preferably quantitative) picture of the size, direction, and nature of intergovernmental finance – and, ideally, some guidance for policy designed to improve outcomes – appears to be neverending. “Fiscal balance” and “fiscal sustainability” are, for example, terms commonly heard in discussions of intergovernmental fiscal relations....

— This study analyzes the effect of fiscal decentralization on health outcomes in China using a panel data set with nationwide county-level fiscal data. We find that more fiscally decentralized provinces have lower infant mortality rates than provinces that are the main spending authority, if certain conditions are met. Key among those conditions are the county governments’ own fiscal capacity ...