Can Fiscal Decentralization Strengthen Social Capital?

Mello, Luiz R. de

doi:10.1177/1091142103260699

“…FD has been a feature of economic reform programs based on the following arguments: (i) decentralization of spending increases efficiency because local governments have better local information and hence can better match policies with the preferences of citizens (Samuelson, 1954;Oates, 1972Oates, , 1993; (ii) decentralization of fiscal activity increases accountability and transparency of public good delivery (de Mello, 2000a); and (iii) taxpayers are more willing to cooperate with the accountable local governments (Wasylenko, 1987).…”

Section: Introductionmentioning

confidence: 99%

Fiscal decentralization and deficits: International evidence

Neyaptı

¹

2010

European Journal of Political Economy

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This paper investigates macroeconomic effects of fiscal decentralization, which has been a neglected area of research. Panel evidence for 16 countries over 1980-1998 indicates that expenditure and revenue decentralization reduce budget deficits. A principal finding is that the fiscal disciplining effect of fiscal decentralization increases with population size. Interestingly, absence of local elections is associated with greater effectiveness of fiscal decentralization. The benefits of expenditure decentralization decrease with ethnolinguistic fractionalization and quality of governance.

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“…"culturally neutral") education types (such as engineering and medicine) and towards country-specific education types (such as law), making their tax base less mobile, however at the price of causing a welfare loss 8 While it is not critical for our results whether regional cultural identity affects utility directly, or whether these effects occur indirectly though increased productivity, as we show in Appendix A, these studies find, among other things, a strong positive relationship between ethnic homogeneity, social capital, and growth, which is in principle accordance with our results. 9 Most notably, Bjørnskov andSvendsen (2002) andde Mello (2000). While the causal interpretation for this correlation of both of these works is different than the interpretation that our model offers, this correlation does not conflict with central results of our paper.…”

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confidence: 42%

“…Section 2 develops and solves the basic model of 15 We find it adequate to model wages as uncertain, assuming that investments in culture yield a return over decades or even life-times and as local productivity seems very likely to be more volatile during the same time-span. 16 Most notably, Bjørnskov andSvendsen (2002) andde Mello (2000).…”

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confidence: 99%

Cultural identity, mobility and decentralization

Schild

¹

,

Wrede

²

2015

Journal of Comparative Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in University of Marburg and CESifoThis version: April 2010 AbstractRegional cultural identity increases trust and facilitates interaction between native citizens ("social capital"). At the same time, it also affects non-native's migration decisions and their utility as it excludes non-native mobile workers from economic interaction within the region. Policies to increase regional cultural identity thus exert an externality that is negative for a basic model where future local productivity is exogenous and random, leading to the result of oversupply of regional culture under decentralization. If migration affects productivity, the basic result of oversupply may be reversed, depending on production technology and the government's objective function. Some positive and normative conclusions for cultural policy are derived.JEL Classification: H72, H73, J61, Z13

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“…De Mello (2004) shows that fiscal decentralization also strengthens social capital in a crosscountry study. Thus, it is not surprising that in our analysis government centralization is of high explanatory power for the level of government indebtedness, too.…”

Section: Empirical Investigationmentioning

confidence: 99%

Trust and Fiscal Performance: A Panel Analysis with Swiss Data

Torgler

¹

,

Schaltegger

²

2005

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Paldam (2000, p. 649) Terms of use: Documents in EconStor may IntroductionSeveral OECD countries have accumulated large government debts over the last 30 years. Very much the same applies for sub-federal governments. Why do we observe large debts in certain governments but not in others? An explanation to that question can be found looking at the institutional framework of jurisdictions. They are particularly important for fiscal policy decisions as fiscal institutions create the environment, the incentives, the rules, the regulations and the constraints under which budgets are drafted, approved, and implemented. Fiscal institutions can promote fiscal discipline if properly designed while an institutional framework that results in soft budget constraints provides incentives for loose fiscal discipline. These rules greatly vary over governments and thus provide a reasonable explanation for cross-section variations in debt levels However, it will never be possible to design a constitution and to establish a framework of quantitative and procedural institutions that answers all future questions of a society. Hence, in all those cases where there is a degree of uncertainty, trust becomes a crucial aspect. Guerra and Zizzo (2003) point out that "without uncertainty, trust is not a significant issue because certainty means the outcome will be the same whether or not a trusting act was involved" (p. 3).Mutual trust in the case of uncertainty reduces transaction costs and makes the institutional architecture to work smoothly (Putnam 1993(Putnam , 2000Fukuyama 1995). Trust can be seen as the social capital of a society. Alesina and La Ferrara (2002) point out that social capital and trust lead to better functioning of public institutions and help in case of market imperfections. Consequently, trust should be a crucial aspect in explaining fiscal policy decisions. Moreover, it is reasonable to assume that deep-seated social capital fosters fiscal discipline.The paper concentrates on the relationship between public debts and trust in the government using the full sample of Swiss state governments over the 1981-2001 period. We measure trust as the ratio of concurrence between Swiss state (cantonal) government's recommendation for an issue put to a vote and the actual outcome at the ballot, but also taking into consideration the number of ballots per year to measure the level of citizens' chance to express their preferences. Ballots help to increase governmental accou...

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Can Fiscal Decentralization Strengthen Social Capital?

Cited by 55 publications

References 44 publications

Fiscal decentralization and deficits: International evidence

Fiscal decentralization and deficits: International evidence

Cultural identity, mobility and decentralization

Trust and Fiscal Performance: A Panel Analysis with Swiss Data

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