Is fiscal decentralisation good for growth?

Roy, Graeme (2006) Is fiscal decentralisation good for growth? Quarterly Economic Commentary, 31 (2). pp. 39-49. ISSN 0306-7866

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    Abstract

    The relationship between fiscal decentralisation and economic growth is an important but highly controversial issue. Increased revenue autonomy for the Scottish Parliament is seen by many as a key tool to improve the performance of the Scottish economy – see for example, Hallwood and MacDonald (2006) and Steel (2006). In contrast, others such as Ashcroft et al. (2006) are concerned about the possible economic and political risks involved and have argued strongly against such a move. This paper contributes to this discussion by providing an objective evaluation of the existing theory and evidence on the link between fiscal decentralisation and economic growth and its relevance to the Scottish case.