Fiscal decentralization is high on the agenda in policy fora. This paper empirically investigates the underlying causes … of fiscal decentralization, based on the predictions of a simple political economy model. We argue that the likeliness …, the theory's main insight being that the central government's electoral strength should, all else being equal, decrease …

of centralization stressed in the existing literature disappear, suggesting that the case for decentralization must be … driven by political economy considerations. Our political economy analysis assumes that under decentralization public goods … and legislative behavior in determining the case for centralization …