From the literature on decentralization, it appears that the fiscal vertical imbalance is somehow inherent to multi-level governments. Using a stylized model we show that this leads to a reduction in the extent of redistributive fiscal policies if the maximal tolerable size of government has...

Using Baltagi and Li (2002)’s semi-parametric fixed effects regression estimator, we investigate the existence of an aggregate ‘Kuznets curve’ in a sample of 113 countries over the 1960–2000 period. Our results show that misspecification of the functional form in a panel model with...