Understanding Fiscal Decentralization

This book provides a comprehensive overview of fiscal decentralization (FD), outlining how it interacts with domestic structures and institutions. It reviews both theoretical and empirical literature relating to macroprudential institutions and macroeconomic outcomes, arguing that the complex relationship between FD and economic development undermines a one-size-fits-all approach for FD design.The book delves into shifting macroeconomic paradigms and evaluates FD in relation to the first- and second-generation fiscal decentralization literature. In light of rapid technological advancements and geopolitical changes, the book also delves into increasingly relevant issues such as fiscal discipline, income distribution, inflation and economic crises. In addition to graphical analysis to showcase international FD trends, as well as empirical analysis to show FD’s relationship with macroeconomic outcomes, a benchmark theoretical model is presented to assess the benefits from FD. It also looks ahead by considering the prospects and pitfalls for the future of FD. This book is an essential resource for students and academics in public economics and fiscal policy. Its valuable insights will greatly benefit professionals and policymakers in political economy and public economics.