Partial Fiscal Decentralization
Much of the literature in Fiscal Federalism treats the allocation of spending duties among different levels of government as a binary choice (centralization vs. decentralization). The Decentralization Theorem (Oates, 1972) stipulates the conditions under which a specific public service should be provided by national or sub-national governments. However, joint provision of public goods and services is the norm in real-world federations such as Switzerland. Shared responsibility in the provision of public goods gives raise to two important consequences: informational problems and vertical interactions. This project aims at advancing research, both theoretical and empirical in the highly policy relevant forum of shared responsibility using the institutional variation of Switzerland. The questions we aim to answer are: What are the determinants of fiscal decentralization? What is the interplay between horizontal and vertical interactions between governments in public good provision? How should decentralization be measured?