Bulletin n. 0/2004 | ||
December 2004 | ||
Arikan G. Gulsun |
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Fiscal Decentralization: A Remedy for Corruption? | ||
in International Tax and Public Finance , vol. 11, no 2 , 2004 , 175 - 195 | ||
This paper examines the effect of fiscal decentralization in a country on the level of corruption. Using a tax competition framework with rent-seeking behavior, it is shown theoretically that fiscal decentralization, modeled as an increase in the number of competing jurisdictions, leads to a lower level of corruption. This result is then tested using a small, cross-country data set. The empirical results are not very strong, but they suggest that the hypothesized relationship between decentralization and corruption may indeed exist. | ||