This paper demonstrates that the optimal structure of taxation in a federal system of governments is one in which only lower level governments are allowed to tax, and the higher level of government receives its revenues as contributions from the lower level governments. The central inefficiency...

Previous literature generally finds greater fiscal decentralization associated with faster economic growth. A separate, but related, literature finds greater fiscal decentralization associated with improved government performance, and stronger constraints on the Leviathan behavior of...

Previous literature generally finds greater fiscal decentralization associated with faster economic growth. A separate, but related, literature finds greater fiscal decentralization associated with improved government performance, and stronger constraints on the Leviathan behavior of...

Previous literature generally finds that greater fiscal decentralization is associated with faster economic growth, improved government performance, and stronger constraints on the Leviathan behavior of governments. Because economic growth critically depends on the presence of good government...