Social Sciences
4 years ago

Central government strength linked to less spending in democracies.

SSRN Electronic Journal
Electoral Competition as a Determinant of Fiscal Decentralization
Mario Jametti, Marcelin Joanis

Paper Summary

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Fiscal decentralization is influenced by how strong a central government is in elections. A study found that when a central government is less powerful, it tends to give more control over spending to local governments. This relationship is not a straight line, but rather a curve where as central government strength decreases, fiscal decentralization increases. This means that political factors play a significant role in determining how much power local governments have over their finances in democracies.