"…fiscal federalism is concerned with 'understanding which functions and instruments are best centralized and which are best placed in the sphere of decentralized levels of government'."
It explores the distribution of power and responsibilities among different levels of government and how this affects public policy outcomes.
Theoretical Frameworks: This topic involves the theoretical frameworks that underlie fiscal federalism theory, including public choice theory, fiscal illusion theory, principal-agent theory, and more.
Intergovernmental Relations: This topic covers the relationships that exist between different levels of government in a federal system, including the balance of powers and responsibilities, intergovernmental transfers, and fiscal decentralization.
Taxation and Spending: This topic covers the ways in which taxes are levied and collected at different levels of government, as well as the role of spending in fiscal federalism theory.
Public Goods and Externalities: This topic covers the concept of public goods and externalities and how they relate to fiscal federalism, including the role of government in providing public goods and addressing externalities.
Constitutional Design: This topic involves the ways in which constitutional design affects federalism, including the distribution of powers, the role of the judiciary, and the relationship between the federal government and the states.
Economic Development: This topic covers the relationship between fiscal federalism and economic development, including the role of intergovernmental transfers, taxes, and spending in promoting economic growth.
Policy Challenges: This topic involves the policy challenges facing governments in a federal system, including balancing competing interests, ensuring accountability, and addressing inequality.
Political Institutions: This topic covers the role of political institutions in fiscal federalism, including the impact of electoral systems, political parties, and interest groups.
Administrative Capacity: This topic involves the administrative capacity of different levels of government and the ways in which this affects fiscal federalism.
International Comparisons: This topic covers comparisons between different federal systems around the world and the lessons that can be learned from them.
Tiebout Hypothesis: This theory suggests that competition among local governments can lead to efficient allocation of resources and optimal provision of public goods.
Grant Theory: This theory suggests that the central government can use grants to incentivize or coerce local governments into implementing policies aligned with the central government's agenda.
Fiscal Decentralization Theory: This theory suggests that decentralization of fiscal responsibility can increase accountability and efficiency in the provision of public goods.
Fiscal Asymmetry Theory: This theory suggests that fiscal disparities among subnational governments can create inequalities in the provision of public goods and services.
Rent-Seeking Theory: This theory suggests that subnational governments may engage in rent-seeking behavior, such as lobbying for grants, in order to maximize their budget and gain favor with their constituents.
Political Economy Theory: This theory suggests that subnational governments may prioritize policies that benefit their own interests or the interests of their constituents, rather than pursuing policies that maximize overall societal welfare.
"…the system of transfer payments or grants by which a central government shares its revenues with lower levels of government."
"A conditional transfer… involves a certain set of conditions… An unconditional grant is usually a cash or tax point transfer, with no spending instructions."
"The concept of fiscal federalism is relevant for every type of government: unitary, federal, and confederal."
"While 'fiscal federalism' is a set of principles that can be applied to all countries attempting 'fiscal decentralization', fiscal federalism is a general normative framework for assignment of functions to the different levels of government and appropriate fiscal instruments for carrying out these functions."
"Governor of Rivers State of Nigeria, Ezenwo Nyesom Wike said that he believes true fiscal federalism will 'strengthen the economy of his country as all sections will develop based on their comparative advantages'."
"Federal and non-federal countries differ in the manner in which such principles are applied."
"The goal of modern fiscal federalism is not just to ensure the efficient allocation of resources, but also to protect liberty and restrain the power of government, to share legislative and fiscal competencies, to foster political participation and preserve markets."
"Application differs because unitary and federal governments differ in their political and legislative context and thus provide different opportunities for fiscal decentralization."
"Over time, the theory of fiscal federalism has evolved considerably."
"Fiscal federalism constitutes a set of guiding principles, a guiding concept."
"Fiscal decentralization, on the other hand, is a process of applying such principles."
"The goal of modern fiscal federalism is… to protect liberty and restrain the power of government."
"The goal of modern fiscal federalism is… to foster political participation."
"The goal of modern fiscal federalism is… to ensure the efficient allocation of resources."
"If the lower level of government is to receive this type of transfer, it must agree to the spending instructions of the federal government."
"An example of this would be a federal equalization transfer."
"It is the study of how competencies (expenditure side) and fiscal instruments (revenue side) are allocated across different (vertical) layers of the administration."
"Federal governments use this power to enforce national rules and standards."
"The system of transfer payments or grants… shares revenues with lower levels of government."