Leviathan and Legislative Monopoly Power: Empirical Evidence from OECD Countries
نویسنده
چکیده
In this paper we test the Leviathan hypothesis, focusing on the joint impact of fiscal decentralization and legislative monopoly power in the growth of the public sector. Two proxies of legislative monopoly power are considered: the control of all relevant houses by the executive party and the margin of majority. Using a dynamic panel-based error correction model on OECD member countries, we find that for strong legislative (party) control, fiscal decentralization constrains government selfishness when the threshold level of sub-national tax autonomy is quite low. By contrast, for smaller regimes of legislative control, fiscal decentralization constrains the public sector size when it is funded by high levels of sub-national autonomous taxation.
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