A common political claim is that decentralized governments undermine policy-makers' ability to resist fiscal imbalance. This paper examines how fiscal centralization influences the likelihood of a successful fiscal adjustment. Using a panel of Swiss cantons from 1981 to 2001, we empirically...

Several authors have argued that a centralization of fiscal powers in a federation is less likely to occur if citizens have to approve a change in the assignments of responsibilities by a popular referendum. This outcome may be due to the fact that logrolling is more difficult under direct than...