In addition, a federal system of government enhances the ballot box pressures
already inherent in a two-party political system. For example, popular changes adopted
in one jurisdiction may spill over to another, not due to migration, but rather to
perceived political pressures. The sitting party in the second jurisdiction may feel
compelled to adopt the policy of the first jurisdiction to forestall its opposition from
using the policy as an issue in a subsequent election.
This assumes tax/expenditure bundles are determined by majority voting.
Matching unconditional grants are all that will be necessary if taxes are benefit
taxes. If taxes are other than benefit taxes, then unconditional grants will also be
necessary. Due to space limitations, benefit taxes will be assumed and the discussion
will focus on matching conditional grants.
Buchanan ( 1980), 16.
It is argued that voting is unable to effectively constrain the Leviathan. See Brennan and
Buchanan ( 1980, 20-23).
It has been hypothesized, nevertheless, that increased decentralization could result
in a higher level of government expenditure. Quoting the economic historian John Wallace
Oates ( 1985, 749) suggests that "since individuals have more control over
public decisions at the local than at the state or national level, they will wish to
empower the public sector with a wider range of functions and responsibility where
these activities are carried out at more localized levels of government." See Grosmann
West ( 1994) for a criticism of this hypothesis.
Brennan Geoffrey, and
Buchanan James M. The Power to Tax. Analytical Foundations
of a Fiscal Constitution. Cambridge: Cambridge University Press, 1980.
Breton Albert. "A Theory of Government Grants." Canadian Journal of Economics
and Political Science 31 ( May 1965): 175-87.
Grossman Philip J. "Fiscal Decentralization and Government Size: An Extension." Public Choice 62 ( July 1989): 63-69.
-----. "Fiscal Decentralization and Public Sector Size in Australia." Economic
Record 68 ( September 1992): 240-46.
Grossman Philip J., and
West Edwin G. "Federalism and the Growth of Govennnent
Revisited." Public Choice 79, Nos. 1-2 ( April 1994).
Joulfaian David, and
Marlow Michael L. "Government Size and Decentralization: Evidence from Disaggregated Data." Southern Economic Journal 56 ( April 1990): 1094-102.
Marlow Michael L. "Fiscal Decentralization and Government Size." Public Choice 56
( March 1988): 259-70.
Nelson Michael A. "An Empirical Analysis of State and Local Tax Structure in the
Context of the Leviathan Model of Government." Public Choice 49 ( 1986): 283-94.
-----. "Searching for Leviathan: Comment and Extension." American Economic
Review 77 ( March 1987): 198-204.
Oates Wallace. Fiscal Federalism. New York: Harcourt Bruce Jovanovich, 1972.