The economics of federalism

Abstract

An important development in public finance theory during recent years has been the emergence of the basic elements of a theory of fiscal federalism, based partly on the theory of public goods, partly on the theory of political process and partly on various aspects of location theory. The aim of the theory is to supply answers to basic and wide-ranging questions relating to the case for and the allocation of functions within a federal system, efficiency aspects of migration between jurisdictions, the case for different kinds of intergovernmental grants arrangements and the forms of debt and taxation arrangements appropriate to a federal structure. This volume gathers together most of the significant contributions to the theory, many of which are somewhat inaccessible. Although primarily concerned with federal constitutions, the book is relevant to the analysis of public policy under unitary constitutions which devolve decision-making autonomy to local or regional governments. It also reviews the current state of the art and thereby points out certain gaps that remain to be filled in the future. Show more