Resumen de Fiscal Decentralisation and Government Size: Evidence from a Panel of European Countries

Suzana Makreshanska-Mladenovska, Goran Petrevsk

• This paper provides empirical evidence on the association between fiscal decentralisation and government size on a sample of 28 European countries during 1990-2016. The main findings from our study are as follows: first, expenditure decentralisation is associated with smaller government size; second, revenue decentralisation has negative effect on government size only in the sub-sample of Central and Eastern European countries; third, we cannot provide empirical support to the common-pool hypothesis, implying that it is expenditure decentralisation that matters for the size of general government notwithstanding how sub-national governments finance their expenditure.