In this paper we use a simple bureaucracy model of fiscal illusion to analyze the impact of intergovernmental grants on the cost efficiency of local jurisdictions. We find that a higher degree of redistribution within a system of fiscal equalization or an increase in the amount of grants...

The paper examines the role of the vertical structure of the public sector for economic growth in Germany in a long?term perspective. A theoretical model shows that, due to spillover effects of public service provision across lower level governments, federal government activities could have...

The fiscal and financial reforms carried out in Mexico in 2000 have encouraged a widespread presence of rating agencies and have allowed several States and unicipalities to raise funds through bond offerings in the capital market. Any local government in Mexico intending to access credit and...

Infolge der Regionalisierung von Wirtschafts- und Strukturpolitik entstehen entweder vollkommen neue Institutionen (horizontale Regionalisierung) oder Institutionen mit neuen Kompetenzen (vertikale Regionalisierung). Der Erfolg einer Regionalisierungspolitik läßt sich am Grad der...

This paper analyses and compares the efficiency of alternative incentive compatible grant schemes under asymmetric information relieving subnational governments of excessive debt burden. They allow intervention into local debt, local tax or complete local fiscal policy. In the first case,...

Contestants have to choose whether to initiate a contest or war, or whether to remain peaceful for another period. We find that agents wait and initiate the contest once their rival is sufficiently weak to be an easy target.

The majority of theoretical and empirical studies on the relationship between decentralization and corruption argues that the devolution of power might be a feasible instrument to keep corruption at bay. We argue that this result crucially depends on the possibility to monitor bureaucrat's...

The advantages and disadvantages of public sector decentralization are widely discussed in economics and political science. Some authors argue that decentralization leads to an optimal provision of public services and promotes economic growth, while others emphasize the dangers of competition...

The paper confronts different aspects of decentralization: fiscal decentralization, postconstitutional regulatory decentralization, and constitutional decentralization - using a single dataset from Russian Federation of the Yeltsin period as a politically asymmetric country and a variety of...

Even though the introduction of the Euro did not necessitate tax harmonization per se, it is expected to lead to increasingly harmonized taxation in practice. This harmonization process will mainly take the form of negotiations on the level of EMU, where political recommendations will be...