How does fiscal decentralization affect aggregate, national, and subnational government size?

Beyond conducting the usual regression analysis of the relationship between fiscal decentralization and aggregate government size (national and subnational combined), this paper makes the first attempt to examine how different fiscal decentralization measures affect the sizes of national and subnational (state and local combined) governments. An econometric analysis using panel data from 32 industrial and developing countries, 1980¨C1994, finds that (1) expenditure decentralization leads to smaller national governments, larger subnational governments, and larger aggregate governments; (2) revenue decentralization increases subnational governments by less than it reduces national governments, hence leads to smaller aggregate governments; and (3) vertical imbalance tends to increase the sizes of subnational, national, and aggregate governments.Fiscal decentralization, Size of government, Vertical imbalance, Borrowing constraints

Fiscal decentralization, revenue and expenditure assignments, and growth in China

Theory suggests that a close match between revenue and expenditure assignments at sub-national levels benefits allocative efficiency, and hence economic growth. That is, a convergence of revenue and expenditure assignments at sub-national levels of government should, according to the theory, be positively associated with a higher growth rate. In the case of China, this paper shows, divergence, rather than convergence, in revenue and expenditures at the sub-national level of government is associated with higher rates of growth. A panel dataset for 30 provinces in China is used to examine the relationship between fiscal decentralization and economic growth over two phases of fiscal decentralization in China: (1) 1979¨C1993 under the fiscal contract system, and (2) 1994¨C1999 under the tax assignment system. The seeming contradiction between the theory and evidence in the China case is reconciled by taking into account the institutional arrangements that prevailed during the two phases of fiscal decentralization, in particular the inconsistency between the assumptions of the theory of fiscal decentralization and the institutional reality of China.Fiscal decentralization, Economic growth, Revenue, Expenditure

New Planar P-time Computable Six-Vertex Models and a Complete Complexity Classification

We discover new P-time computable six-vertex models on planar graphs beyond Kasteleyn's algorithm for counting planar perfect matchings. We further prove that there are no more: Together, they exhaust all P-time computable six-vertex models on planar graphs, assuming #P is not P. This leads to the following exact complexity classification: For every parameter setting in ${\mathbb C}$ for the six-vertex model, the partition function is either (1) computable in P-time for every graph, or (2) #P-hard for general graphs but computable in P-time for planar graphs, or (3) #P-hard even for planar graphs. The classification has an explicit criterion. The new P-time cases in (2) provably cannot be subsumed by Kasteleyn's algorithm. They are obtained by a non-local connection to #CSP, defined in terms of a "loop space". This is the first substantive advance toward a planar Holant classification with not necessarily symmetric constraints. We introduce M\"obius transformation on ${\mathbb C}$ as a powerful new tool in hardness proofs for counting problems.Comment: 61 pages, 16 figures. An extended abstract appears in SODA 202