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Wiley InterScience | |||||||||
  Economics & PoliticsVolume 14 Issue 3, Pages 351 - 373 Published Online: 7 Feb 2003 © 2010 Blackwell Publishing Ltd
Abstract | Full Text: PDF (Size: 177K) | Related Articles | Citation Tracking  Spending Growth With Vertical Fiscal Imbalance: Decentralized Government Spending In Norway, 1880–1990 Copyright Blackwell Publishers Ltd 2002 ABSTRACTVertical fiscal imbalance, decentralized responsibility of spending with centralized financing, creates a common pool problem with spending pressure towards central funds. A model of decentralized government spending under vertical fiscal imbalance is developed, and the importance of national political characteristics for internalization of costs and spending level is investigated in an econometric analysis of Norway during 1880–1990. We argue that in a parliamentary democracy, the internalization of costs is influenced by the party fragmentation of parliament. This is confirmed by the econometric analysis using a Herfindahl index as a measure of fragmentation and political strength. | 
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