The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Fiscal Federalism

  • David E. Wildasin
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_226

Abstract

Fiscal federalism is concerned with the division of policy responsibilities among different levels of government and with the fiscal interactions among these governments. Public service provision by lower-level governments can be efficiency-enhancing, although competition for mobile resources can also interfere with efficient resource allocation both in the public and private sectors. Intergovernmental transfers affect the overall equity and efficiency properties of public policies. Global economic integration and political and economic reforms in developing and transition economies – which have institutional contexts very different from those of the mature federations – present important challenges for a ‘second generation’ of federalism research.

Keywords

Decentralization Factor mobility Fiscal competition Fiscal federalism Horizontal equity Intergovernmental grants Local public goods Optimal currency areas Planning Policy coordination Stabilization policy Tax competition Tax distortions Tiebout hypothesis 
This is a preview of subscription content, log in to check access

Bibliography

  1. Alesina, A., and E. Spolaore. 2003. The size of nations. Cambridge, MA: MIT Press.Google Scholar
  2. Besley, T., and A. Case. 1995. Incumbent behavior: Vote seeking, tax setting and yardstick competition. American Economic Review 85: 25–45.Google Scholar
  3. Bird, R.M., and F. Vaillancourt. 1998. Fiscal decentralization in developing countries. Cambridge: Cambridge University Press.Google Scholar
  4. Boadway, R.W., and F. Flatters. 1983. Efficiency and equalization payments in a federal system of government: a synthesis and extension of recent results. Canadian Journal of Economics 15: 613–633.CrossRefGoogle Scholar
  5. Brennan, G., and J.M. Buchanan. 1980. The power to tax. Cambridge: Cambridge University Press.Google Scholar
  6. Breton, A. 1965. A theory of government grants. Canadian Journal of Economics and Political Science 31: 175–187.CrossRefGoogle Scholar
  7. Buettner, T., and D.E. Wildasin. 2006. The dynamics of municipal fiscal adjustment. Journal of Public Economics 90: 1115–1132.CrossRefGoogle Scholar
  8. Fischel, W.A. 2001. The homevoter hypothesis: How home values influence local government taxation, school finance, and land-use policies. Cambridge, MA: Harvard University Press.Google Scholar
  9. Inman, R.P. 2003. Transfers and bailouts: Enforcing local fiscal discipline with lessons from US federalism. In Rodden, Eskeland and Litvack (2003).Google Scholar
  10. Inman, R.P., and D.L. Rubinfeld. 1979. The judicial pursuit of local fiscal equity. Harvard Law Review 92: 1662–1750.CrossRefGoogle Scholar
  11. Martinez-Vasquez, J., and J. Alm. 2003. Public finance in developing and transition countries: Essays in honor of Richard Bird. Cheltenham: Edward Elgar.Google Scholar
  12. McLure, C.E., and J. Martinez-Vasquez. n.d. The assignment of revenues and expenditures in intergovernmental fiscal relations. Washington, DC: World Bank.Google Scholar
  13. Mundell, R.A. 1961. A theory of optimum currency areas. American Economic Review 51: 509–517.Google Scholar
  14. Musgrave, R.A. 1959. Theory of public finance. New York: Macmillan.Google Scholar
  15. Oates, W.E. 1972. Fiscal federalism. New York: Harcourt Brace Jovanovich.Google Scholar
  16. Oates, W.E. 2005. Toward a second-generation theory of fiscal federalism. International Tax and Public Finance 12: 349–373.CrossRefGoogle Scholar
  17. Rodden, J., G.S. Eskeland, and J. Litvack. 2003. Fiscal decentralization and the challenge of hard budget constraints. Cambridge, MA: MIT Press.Google Scholar
  18. Stigler, G.J. 1957. The tenable range of functions of local government. Joint Economic Committee. In Federal expenditure policy for economic growth and stability. Washington, DC: US Government Printing Office.Google Scholar
  19. Tiebout, C.M. 1956. A pure theory of local expenditures. Journal of Political Economy 64: 416–424.CrossRefGoogle Scholar
  20. Wallack, J., and T.N. Srinivasan. 2006. Federalism and economic reform: International perspectives. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  21. Weingast, B. 2006. Second generation fiscal federalism: Implications for decentralized democratic governance and economic development. Unpublished paper presented at IFIR-CESifo Conference, New Directions in Fiscal Federalism. Lexington.Google Scholar
  22. Wildasin, D.E. 1986. Urban public finance. New York: Harwood Academic.Google Scholar
  23. Wildasin, D.E. 1997a. Fiscal aspects of evolving federations. Cambridge: Cambridge University Press.Google Scholar
  24. Wildasin, D.E. 1997b. Externalities and bailouts: Hard and soft budget constraints in intergovernmental fiscal relations. Policy research working paper No. 1843. Washington, DC: World Bank.Google Scholar
  25. Wildasin, D.E. 2004. The institutions of federalism: toward an analytical framework. National Tax Journal 62: 247–272.CrossRefGoogle Scholar
  26. Wildasin, D.E. 2006a. Fiscal competition. In Oxford handbook of political economy, ed. B. Weingast and D. Wittman. Oxford: Oxford University Press.Google Scholar
  27. Wildasin, D.E. 2006b. Global competition for mobile resources: implications for equity, efficiency, and political economy. CESifo Economic Studies 52: 61–111.CrossRefGoogle Scholar
  28. Wildasin, D.E. 2006c. Public finance in an era of global demographic change: fertility busts, migration booms, and public policy. Unpublished paper presented at Council on Foreign Relations conference, Skilled migration today: Prospects, problems, and policies. New York.Google Scholar
  29. Wilson, J.D. 1999. Theories of tax competition. National Tax Journal 52: 296–315.Google Scholar
  30. Wilson, J.D., and D.E. Wildasin. 2004. Capital tax competition: Bane or boon? Journal of Public Economics 88: 1065–1091.CrossRefGoogle Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • David E. Wildasin
    • 1
  1. 1.