A EUROPEAN STATE - LESSONS FROM EXISTING FEDERATIONS DOES CENTRALIZATION INCREASE THE SIZE OF GOVERNMENT

Citation
T. Persson et G. Tabellini, A EUROPEAN STATE - LESSONS FROM EXISTING FEDERATIONS DOES CENTRALIZATION INCREASE THE SIZE OF GOVERNMENT, European economic review, 38(3-4), 1994, pp. 765-773
Citations number
18
Categorie Soggetti
Economics
Journal title
ISSN journal
00142921
Volume
38
Issue
3-4
Year of publication
1994
Pages
765 - 773
Database
ISI
SICI code
0014-2921(1994)38:3-4<765:AES-LF>2.0.ZU;2-9
Abstract
Are fiscal programs larger or smaller if they are run centrally, rathe r than locally, in a prospective federation. We abstract completely fr om well-understood economic issues and focus instead on the political effects of centralization. For fiscal programs with benefits broadly s pread in the population - such as redistributive transfer schemes, soc ial insurance and general government consumption - centralization chan ges the coalition of voters who favor a large program in a direction t hat depends on the nature of the redistributive instrument. For fiscal programs with localized benefits - such as provision of local public goods - centralization creates opportunities for rent-seeking, which i ncreases the size of government.