An Essay on Fiscal Federalism
01 Sep 1999-Journal of Economic Literature (American Economic Association)-Vol. 37, Iss: 3, pp 1120-1149
TL;DR: In the United Kingdom, both Scot- land and Wales have opted under the Blair government for their own regional parliaments and in Italy the movement toward decentralization has gone so far as to encompass a serious proposal for the separation of the nation into two in-dependent countries as mentioned in this paper.
Abstract: vogue. Both in the industrialized and in the developing world, nations are turning to devolution to improve the per- formance of their public sectors. In the United States, the central government has turned back significant portions of federal authority to the states for a wide range of major programs, including wel- fare, Medicaid, legal services, housing, and job training. The hope is that state and local governments, being closer to the people, will be more responsive to the particular preferences of their con- stituencies and will be able to find new and better ways to provide these ser- vices. In the United Kingdom, both Scot- land and Wales have opted under the Blair government for their own regional parliaments. And in Italy the movement toward decentralization has gone so far as to encompass a serious proposal for the separation of the nation into two in- dependent countries. In the developing world, we likewise see widespread inter- est in fiscal decentralization with the ob- jective of breaking the grip of central planning that, in the view of many, has failed to bring these nations onto a path of self-sustaining growth. But the proper goal of restructuring the public sector cannot simply be de- centralization. The public sector in nearly all countries consists of several different levels. The basic issue is one of aligning responsibilities and fiscal in- struments with the proper levels of gov- ernment. As Alexis de Toqueville ob- served more than a centuty ago, "The federal system was created with the in- tention of combining the different ad- vantages which result from the magni- tude and the littleness of nations" (1980, v. I, p. 163). But to realize these "dif- ferent advantages," we need to under- stand which functions and instruments are best centralized and which are best placed in the sphere of decentralized levels of government. This is the sub- ject matter of fiscal federalism. As a subfield of public finance, fiscal feder- alism addresses the vertical structure of the public sector. It explores, both in normative and positive terms, the roles of the different levels of government and the ways in which they relate to one another through such instruments as intergovernmental grants.2
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TL;DR: In this article, the authors draw on several literatures to distinguish two types of multi-level governance: dispersion of authority to general-purpose, nonintersecting, and durable jurisdictions, and task-specific, intersecting and flexible jurisdictions.
Abstract: The reallocation of authority upward, downward, and sideways from central states has drawn attention from a growing number of scholars in political science. Yet beyond agreement that governance has become (and should be) multi-level, there is no consensus about how it should be organized. This article draws on several literatures to distinguish two types of multi-level governance. One type conceives of dispersion of authority to general-purpose, nonintersecting, and durable jurisdictions. A second type of governance conceives of task-specific, intersecting, and flexible jurisdictions. We conclude by specifying the virtues of each type of governance.For comments and advice we are grateful to Christopher Ansell, Ian Bache, Richard Balme, Arthur Benz, Tanja Borzel, Renaud Dehousse, Burkard Eberlein, Peter Hall, Edgar Grande, Richard Haesly, Bob Jessop, Beate Kohler-Koch, David Lake, Patrick Le Gales, Christiane Lemke, David Lowery, Michael McGinnis, Andrew Moravcsik, Elinor Ostrom, Franz U. Pappi, Thomas Risse, James Rosenau, Alberta Sbragia, Philippe Schmitter, Ulf Sverdrup, Christian Tusschoff, Bernhard Wessels, the political science discussion group at the University of North Carolina, and the editor and three anonymous reviewers of APSR. We received institutional support from the Center for European Studies at the University of North Carolina, the Alexander von Humboldt Foundation, and the Wissenschaftszentrum fur Sozialforschung in Berlin. Earlier versions were presented at the European Union Studies Association meeting, the ECPR pan-European Conference in Bordeaux, and Hannover Universitat, Harvard University, Humboldt Universitat, Indiana University at Bloomington, Mannheim Universitat, Sheffield University, Sciences Po (Paris), Technische Universitat Munchen, and the Vrije Universiteit Amsterdam. The authors' names appear in alphabetical order.
1,956 citations
TL;DR: The authors analyzes China's institution, a regionally decentralized authoritarian system where the central government has control over personnel, whereas subnational governments run the bulk of the economy; and they initiate, negotiate, implement, divert, and resist reforms, policies, rules, and laws.
Abstract: China's economic reforms have resulted in spectacular growth and poverty reduction. However, China's institutions look ill-suited to achieve such a result, and they indeed suffer from serious shortcomings. To solve the "China puzzle," this paper analyzes China's institution—a regionally decentralized authoritarian system. The central government has control over personnel, whereas subnational governments run the bulk of the economy; and they initiate, negotiate, implement, divert, and resist reforms, policies, rules, and laws. China's reform trajectories have been shaped by regional decentralization. Spectacular performance on the one hand and grave problems on the other hand are all determined by this governance structure. ( JEL O17, O18, O43, P21, P25, P26)
1,604 citations
Book•
01 Jan 2005
TL;DR: In this paper, the authors explained the EU political system and the decision-making procedures of the European Union, focusing on the role of the Single Market and the single market's role in the political system.
Abstract: Introduction: Explaining the EU Political System PART I: GOVERNMENT Executive Politics Legislative Politics Judicial Politics PART II: POLITICS Public Opinion Democracy, Parties and Elections Interest Representation PART III: POLICY-MAKING Regulation of the Single Market Expenditure Policies Economic and Monetary Union Citizen Freedom and Security Policies Foreign Policies Conclusions: Rethinking the European Union Appendix: Decision-making Procedures of the European Union Bibliography
1,282 citations
TL;DR: In this paper, a meta-analysis of 47 case studies from Northern America and Western Europe is conducted to explore whether and to what extent the existence of multiple levels of governance affects the ability of participatory decision-making to deliver high quality environmental policy output and to improve implementation and compliance.
Abstract: Current political trends and scholarly research increasingly promote collaborative and participatory governance in multi-level systems as a way to more sustainable and effective environmental policy. Yet empirical findings as well as conceptual works from different academic fields remain ambiguous about this claim. This paper explores whether and to what extent the existence of multiple levels of governance affects the ability of participatory decision-making to deliver high quality environmental policy output and to improve implementation and compliance. To this end, findings from the literature on multi-level governance, public participation and policy implementation as well as on complex systems are integrated in five sets of hypotheses. In order to put these to a ‘plausibility probe’, a meta-analysis of 47 case studies from Northern America and Western Europe is conducted. These cases provide qualitative insights and allow for some generalization in the form of correlation analysis. The study finds that, predominantly, environmental preferences of the involved actors determine the environmental outputs (and outcomes) of decision-making. Further, face-to-face, but not mere two-way, communication appears to positively influence the ecological standard of decisions. The analysis also suggests that a highly polycentric governance system comprising many agencies and levels of governance yields higher environmental outputs than rather monocentric governance. However, correlations between governance effectiveness and decision-making scale, as well as policy delivery and institutional fit to ecosystem, could not be identified. The paper concludes by outlining pathways for more systematic comparative research on these pressing research questions. Copyright © 2009 John Wiley & Sons, Ltd and ERP Environment.
817 citations
22 Sep 2001
TL;DR: In this paper, the authors consider economic, political, and behavioral explanations for the differences between the United States and Europe and conclude that most of these theories cannot explain the observed differences.
Abstract: EUROPEAN GOVERNMENTS REDISTRIBUTE income among their citizens on a much larger scale than does the U.S. government. European social programs are more generous and reach a larger share of citizens. European tax systems are more progressive. European regulations designed to protect the poor are more intrusive. In this paper we try to understand why. The literature on the size of government is rich and varied. However, here we do not focus on the size of government as such, but rather on the redistributive side of government policies. Thus our goal is in one sense narrower than answering the question, "What explains the size of government?" since we focus on a single, but increasingly important, role of fiscal policy. Yet in another sense our focus is broader, because redistributive policies go beyond the government budget--think, for instance, of labor market policies. We consider economic, political, and behavioral explanations for these differences between the United States and Europe. Economic explanations focus on the variance of income and the skewness of the income distribution before taxes and transfers, the social costs of taxation, the volatility of income, and expected changes in income for the median voter. We conclude that most of these theories cannot explain the observed differences. Before-tax income in the United States has both a higher variance and a more skewed distribution. There is no evidence that the deadweight losses from taxation are lower in Europe. And the volatility of income appears to be lower in Europe than in the United States. However, there is some possibility that middle-class households in the United States have a greater chance of moving up in the income distribution, which would make the median voter more averse to redistribution. Political explanations for the observed level of redistribution focus on institutions that prevent minorities from gaining political power or that strictly protect individuals' private property. Cross-country comparisons indicate the importance of these institutions in limiting redistribution. For instance, at the federal level, the United States does not have proportional representation, which played an important role in facilitating the growth of socialist parties in many European countries. America has strong courts that have routinely rejected popular attempts at redistribution, such as the income tax or labor regulation. The European equivalents of these courts were swept away as democracy replaced monarchy and aristocracy. The federal structure of the United States may have also contributed to constraining the role of the central government in redistribution. These political institutions result from particular features of U.S. history and geography. The formation of the United States as a federation of independent territories led to a structure that often creates obstacles to centralized redistributive policies. The relative political stability of the United States over more than two centuries means that it is still governed by an eighteenth-century constitution designed to protect property. As world war and revolution uprooted the old European monarchies, the twentieth-century constitutions that replaced them were more oriented toward majority rule, and less toward protection of private property. Moreover, the spatial organization of the United States--in particular, its low population density--meant that the U.S. government was much less threatened by socialist revolution. In contrast, many of Europe's institutions were established either by revolutionary groups directly or by elites in response to the threat of violence. Finally, we discuss reciprocal altruism as a possible behavioral explanation for redistribution. Reciprocal altruism implies that voters will dislike giving money to the poor if, as in the United States, the poor are perceived as lazy. In contrast, Europeans overwhelmingly believe that the poor are poor because they have been unfortunate. …
804 citations
Cites background from "An Essay on Fiscal Federalism"
...For a recent survey of the literature on this point see Oates (1999)....
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...For a recent survey of the literature on this point see Oates (1999). 61....
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...See Oates (1999) and the references cited therein....
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...See Oates (1999) and the references cited therein. spending was already high at the end of the nineteenth century, the absolute difference grew as the welfare state expanded both in Europe and in the United States, especially in the 1960s and 1970s....
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References
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Book•
01 Jan 1962
TL;DR: A history of diffusion research can be found in this paper, where the authors present a glossary of developments in the field of Diffusion research and discuss the consequences of these developments.
Abstract: Contents Preface CHAPTER 1. ELEMENTS OF DIFFUSION CHAPTER 2. A HISTORY OF DIFFUSION RESEARCH CHAPTER 3. CONTRIBUTIONS AND CRITICISMS OF DIFFUSION RESEARCH CHAPTER 4. THE GENERATION OF INNOVATIONS CHAPTER 5. THE INNOVATION-DECISION PROCESS CHAPTER 6. ATTRIBUTES OF INNOVATIONS AND THEIR RATE OF ADOPTION CHAPTER 7. INNOVATIVENESS AND ADOPTER CATEGORIES CHAPTER 8. DIFFUSION NETWORKS CHAPTER 9. THE CHANGE AGENT CHAPTER 10. INNOVATION IN ORGANIZATIONS CHAPTER 11. CONSEQUENCES OF INNOVATIONS Glossary Bibliography Name Index Subject Index
38,750 citations
TL;DR: The authors show that the Musgrave-Samuelson analysis, which is valid for federal expenditures, need not apply to local expenditures, and restate the assumptions made by Musgrave and Samuelson and the central problems with which they deal.
Abstract: NE of the most important recent developments in the area of "applied economic theory" has been the work of Musgrave and Samuelson in public finance theory.2 The two writers agree on what is probably the major point under investigation, namely, that no "market type" solution exists to determine the level of expenditures on public goods. Seemingly, we are faced with the problem of having a rather large portion of our national income allocated in a "non-optimal" way when compared with the private sector. This discussion will show that the Musgrave-Samuelson analysis, which is valid for federal expenditures, need not apply to local expenditures. The plan of the discussion is first to restate the assumptions made by Musgrave and Samuelson and the central problems with which they deal. After looking at a key difference between the federal versus local cases, I shall present a simple model. This model yields a solution for the level of expenditures for local public goods which reflects the preferences of the population more adequately than they can be reflected at the national level. The assumptions of the model will then be relaxed to see what implications are involved. Finally, policy considerations will be discussed.
12,105 citations
Book•
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01 Jan 1835
TL;DR: De Tocqueville examines the structures, institutions and operation of democracy, and shows how Europe can learn from American success and failures as mentioned in this paper, and also predicts that slavery will bring about the'most horrible of civil wars', foresees that the USA and Russia will be the Superpowers of the twentieth century, and is 150 years ahead of his time in his views on the position and importance of women.
Abstract: Abridged, with an Introduction by Patrick Renshaw. Democracy in America is a classic of political philosophy. Hailed by John Stuart Mill and Horace Greely as the finest book ever written on the nature of democracy, it continues to be an influential text on both sides of the Atlantic, above all in the emerging democracies of Eastern Europe. De Tocqueville examines the structures, institutions and operation of democracy, and shows how Europe can learn from American success and failures. His central theme is the advancement of the rule of the people, but he also predicts that slavery will bring about the 'most horrible of civil wars', foresees that the USA and Russia will be the Superpowers of the twentieth century, and is 150 years ahead of his time in his views on the position and importance of women.
5,657 citations
5,295 citations