-agent framework, it analyzes two alternative policy-decision schemes - "decentralization" and "centralization" - when "knowledge … explaining variation in the degree of decentralization across countries. Within a two-sided incomplete information principal … government levels. It is shown that, depending on which level of policy decision-making controls the degree of decentralization …

implications of three different fiscal regimes for capital accumulation and aggregate national welfare. Full centralization of … is similar across regions. When regional differences exist but are not too large, the partial centralization regime is … composition. Only when the differences are sufficiently large does full decentralization become the optimal regime. National …

́information is more relevant (centralization). The empirical analysis confirms that the importance of donors ́private information …