Template-type: ReDIF-Paper 1.0
Author-Name:  Patricio Perez
Author-Workplace-Name: University of Cantabria

Author-Name: David Cantarero
Author-Email:  david.cantarero@unican.es
Author-Workplace-Name:  University of Cantabria
 





Title: Decentralization and Regional Government Size:
an Application to the Spanish Case

Abstract: This paper studies the impact of decentralization on the size of regional governments in Spain controlling for economies of scale, interregional heterogeneity and institutional framework, and successfully tests some implications of the model. Firstly, it supports the classic public goods theory of a trade-off-between the economic benefits of size and the costs of heterogeneity. Secondly, it rejects the “Leviathan” hypothesis because of vertical power imbalance and lack of fiscal competition among regions. Thirdly, the paper argues that government size is mediated by financial resources obtained through intergovernmental grants, consistent with welfare economics and positive economic politics.

Keywords: government size, fiscal decentralization, leviathan hypothesis, vertical imbalances, flypaper effect.

Length: 28 pages

Creation-Date: 2010-11-01

File-URL: http://icepp.gsu.edu/files/2015/03/ispwp1032.pdf

File-Format:application/pdf

Handle: RePEc:ays:ispwps:paper1032