Ovaj rad pruža empirijsku studiju veze između fiskalne decentralizacije i veličine javnog sektora na panelu od 20 europskih zemalja u razdoblju od 1999. do 2016. godine. Veličina javnog sektora je zavisna varijabla te se mjeri kao udio javne potrošnje u BDP- u, iskazana u postotku. Fiskalna decentralizacija se mjeri kroz decentralizaciju potrošnje te predstavlja nezavisnu varijablu. Nezavisna varijabla se mjeri kroz potrošnju sub- nacionale razine vlasti u ukupnoj javnoj potrošnji. Kontrolne varijable korištene u modelu su: BDP po glavi stanovnika, trgovinska otvorenost i inflacija. U istraživanju se model s fiksnim efektom pokazao opravdanim. Postavljene su dvije hipoteze od kojih se prihvaća nulta hipoteza. U radu nije potvrđena Levijatanska hipoteza, ali je potvrđen Wagnerov zakon. Rad pruža kvalitetan pregled dosadašnje teorijske i empirijske literature.This paper provides an empirical study of the association between fiscal decentralization and the size of the public sector in a panel of 20 European countries from 1999 to 2016. The size of the public sector is a dependent variable and is measured as a share of public expenditure as a percentage of GDP. Fiscal decentralization is measured through decentralization of expenditure and is an independent variable. The independent variable is measured by the expenditure of the sub- national level of government in total general government expenditure. The control variables used in the model are: GDP per capita, trade openness and inflation. In the study, the fixed- effect model proved justified. Two hypotheses have been set out of which the null hypothesis is accepted. The paper does not confirm the Leviathan hypothesis, but Wagner's law is confirmed. The paper provides a qualitative overview of the theoretical and empirical literature to date
