Dezentrale Finanzpolitik und Modellunsicherheit

From a theoretical perspective, decentralization of fiscal competencies is often seen as a threat to efficiency. From a more dynamic perspective, however, there is a claim that decentralization may lead to efficiency-enhancing processes of learning and innovation. But in the realm of public economics, this claim has not been well-founded theoretically so far. In this book, a micro-based model is developed in order to examine under which conditions learning and innovation in public policies are likely to occur and how they unfold. The model is discussed for various assumptions regarding mobility. It turns out that efficient learning requires factor migration to produce correct price signals. The decentralized solution is shown to be always superior to the centralized solution as far as the production and utilisation of knowledge is concerned. A harmonization ex post, where one efficient policy is universally adopted is, however, not to be expected.