Empirical Fiscal Federalism Elements in Public Economics Series

Fiscal federalism has long been an important topic of inquiry in applied public economics, and interest in the functioning of intergovernmental fiscal relationships in multi-tiered public sector structures does not seem to be fading. Rather, the recent economic downturn and sovereign debt crisis have brought the analysis of multi-level fiscal governance to the forefront of academic discourse and stimulated the search for tax assignments that ease coordination between authorities at different tiers while preserving local fiscal autonomy and minimizing the harmful effects of taxation on the prospects of economic recovery. This Element examines the recent empirical work in this area and discusses the most critical issues that future research will need to address in order to push further the frontier of econometric analysis in fiscal federalism.

1. Introduction; 2. The Flypaper Effect; 3. Horizontal Fiscal Externalities; 4. Vertical Fiscal Competition; 5. Accountability And Fiscal Policy; 6. Transparency, Information And Social Capital; 7. Soft Budget Constraints; 8. Cross-Country Studies On Decentralization; 9. Conclusions.