Fiscal Decentralization and Public debt in the European Union

In: Lex localis: journal of local self-government, Band 10, Heft 3

Abstract

This paper analyses the relationship between fiscal decentralization and the level of the public debt in the twenty seven member countries of the European Union. Our panel data analysis points to the importance of size as fiscal decentralization reduces public debt in large and small countries, but not in medium - size countries. In addition, our results show that the number of government levels and average size of the lowest government unit is insignificant with respect to the public debt in these countries.