The Department of Economics Theory, History and Development Seminar Series presents

"Partial Fiscal Decentralization: Theory and Evidence for Norway"
with Jan Brueckner, Department Chair of Economics, UCI

Monday, December 3, 2012
3:30-5:00 p.m.
SSPB 3266 (Econ Library)

Brueckner provides an empirical test of a principal tenet of fiscal federalism: that spending discretion, when granted to localities, leads to public-sector heterogeneity, with public-good levels adjusting to suit local demands. The test is based on a simple model of partial fiscal decentralization, under which earmarking of central transfers for particular uses is eliminated, allowing funds to be spent according to local tastes. The model predicts that partial decentralization generates dispersion in the levels of public services as spending  adjusts to local preferences. But the model also yields the more-general prediction that the characteristics of local jurisdictions should play a bigger role in determining the levels of public goods after a decentralization reform than before. Both predictions are confirmed by the Brueckner's empirical results, which show the effects of the 1986 Norwegian reform.

For further information, please contact Gloria Simpson, simpsong@uci.edu or 949-824-5788.

 

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