Journal of Economic Perspectives: Vol. 11 No. 4 (Fall 1997)


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Devolution, Grants, and Fiscal Competition

Article Citation

Musgrave, Richard A. 1997. "Devolution, Grants, and Fiscal Competition." Journal of Economic Perspectives, 11(4): 65-72.

DOI: 10.1257/jep.11.4.65


Following half a century of fiscal activism and federal leadership, the call now is for downsizing the federal budget and a devolution of fiscal responsibilities to states and localities. The call for "federalism," meant to secure a stronger center in James Madison's time, now seeks to decentralize. This paper outlines the main features of fiscal federalism as I see them, sketching a vision which differs in major respects from that offered by the lead paper in this symposium. First I highlight the role of distribution, which I see as a central function. Then, I focus attention on grants-in-aid and their role in the federal system. Finally I consider competition, cooperation, and coordination between jurisdictions.

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Musgrave, Richard A. (Harvard U and U CA, Santa Cruz)

JEL Classifications

H11: Structure, Scope, and Performance of Government
H77: Intergovernmental Relations; Federalism; Secession


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