This paper assesses the effect of fiscal decentralization on government consumption volatility using data for 97 developed and developing countries from 1971 to 2010. The results suggest that a higher degree of fiscal decentralization leads to lower government consumption volatility. This result holds for the sub-sample of advanced economies, while it is not confirmed for those less-developed. This mechanism seems to work mainly through a lower volatility of the non-discretionary spending, which typically belongs to the central government’s policy. We also confirm existing findings according to which country size lowers government spending volatility. Thus, given a minimum level of development, fiscal decentralization reforms can reduce spending volatility by distributing power to sub-central governments, particularly in smaller countries which are usually more prone to volatility.

Can fiscal decentralization alleviate government consumption volatility? / Furceri, Davide; Sacchi, Agnese; Salotti, Simone. - In: OPEN ECONOMIES REVIEW. - ISSN 0923-7992. - STAMPA. - 27:4(2016), pp. 611-636. [10.1007/s11079-016-9392-1]

Can fiscal decentralization alleviate government consumption volatility?

SACCHI, AGNESE;
2016

Abstract

This paper assesses the effect of fiscal decentralization on government consumption volatility using data for 97 developed and developing countries from 1971 to 2010. The results suggest that a higher degree of fiscal decentralization leads to lower government consumption volatility. This result holds for the sub-sample of advanced economies, while it is not confirmed for those less-developed. This mechanism seems to work mainly through a lower volatility of the non-discretionary spending, which typically belongs to the central government’s policy. We also confirm existing findings according to which country size lowers government spending volatility. Thus, given a minimum level of development, fiscal decentralization reforms can reduce spending volatility by distributing power to sub-central governments, particularly in smaller countries which are usually more prone to volatility.
2016
automatic stabilisers; country size; fiscal decentralization; fiscal policy; spending volatility; economics and econometrics
01 Pubblicazione su rivista::01a Articolo in rivista
Can fiscal decentralization alleviate government consumption volatility? / Furceri, Davide; Sacchi, Agnese; Salotti, Simone. - In: OPEN ECONOMIES REVIEW. - ISSN 0923-7992. - STAMPA. - 27:4(2016), pp. 611-636. [10.1007/s11079-016-9392-1]
File allegati a questo prodotto
File Dimensione Formato  
Furceri_Can_2016.pdf

solo gestori archivio

Tipologia: Documento in Post-print (versione successiva alla peer review e accettata per la pubblicazione)
Licenza: Tutti i diritti riservati (All rights reserved)
Dimensione 1.03 MB
Formato Adobe PDF
1.03 MB Adobe PDF   Contatta l'autore

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11573/915229
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 4
  • ???jsp.display-item.citation.isi??? 4
social impact