Introduction to Local Government Economics

Abstract

The traditional approach to local government economics is that of fiscal federalism. This is the result of the development of local government economics in federalist countries, particularly the USA and Canada, but also Australia, Germany and so on. The fiscal federalism literature uses efficiency criteria in assigning individual public sector activities and revenue sources to the various levels of government within federal systems. It refers to market failure, tax incidence, public choice, and other theories to determine the level of government most appropriate for delivery of specific public sector outputs.