Fiscal Decentralization and Economic Growth: Theory and Application

In this study, we examined the effect of fiscal decentralization on economic growth. In economics, tacit and dispersed knowledge, public choice school, and principal–agent approaches provide a theoretical framework for this relationship. This study used both theoretical and empirical approaches. First, the fiscal decentralization–growth relationship was theoretically investigated and then the OECD countries were analyzed using panel data for the period 1995–2012. As a result, we found that different decentralization measurement criteria and different empirical methods have different effects on growt