FISCAL DECENTRALISATION AND MACROECONOMIC PERFORMANCE: INTERNATIONAL EVIDENCE

Bilin NEYAPTİ (Bilkent University)
Derya YALİM (Bilkent University)

There has recently been a growing debate in the literature about the benefits fiscal decentralization. This paper addresses the benefits of decentralization from the perspective of its possible associations with key macroeconomic indicators: budget deficits, inflation and growth. Using various measures of fiscal decentralization, this paper provides suggestive evidence for significant negative association of fiscal decentralization and inflation in a large panel data set, while its association with deficits and growth is not robust across samples or across different measures.