Vertical fiscal imbalance, decentralized responsibility of spending with centralized financing, creates a common pool problem with spending pressure towards central funds. A model of decentralized government spending under vertical fiscal imbalance is developed, and the importance of national...

Excessive administrative spending in local governments has been a concern in the public debate in Norway. Administration takes resources away from welfare services such as primary education and care for the elderly. Since administrative spending varies considerably between local governments, a...