Bulletin n. 2/2010
October 2010
CONTENTS
  • Section A) The theory and practise of the federal states and multi-level systems of government
  • Section B) Global governance and international organizations
  • Section C) Regional integration processes
  • Section D) Federalism as a political idea
    • Arcalean Calin, Glomm Gerhard, Schiopu Ioana, Suedekum Jens
    Public budget composition, fiscal (de)centralization, and welfare
    in Canadian Journal of Economics/Revue Canadienne d'Economique , Volume 43, Number 3 ,  2010 ,  832-859
    We study the optimal degree of fiscal decentralization in a dynamic federal economy where governments decide on budget size and its allocation between public education and infrastructure spending. We find that full centralization of tax and expenditure policies is optimal when infrastructure productivity is similar across regions. When differences are not too large, partial centralization is optimal. With strong differences, full decentralization becomes optimal. National steady-state output tends to be highest under full decentralization. We provide a justification for the mixed evidence regarding the Oates conjecture by showing that full dominates partial decentralization, despite being inferior to complete decentralization.
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