Economic Integration, Tax Erosion, and Decentralisation: An Empirical Analysis


This paper addresses the issues of whether and how economic integration can affect the ability of the central governments to raise tax revenues and lead to a greater decentralisation of the public sector. To this purpose, a country-specific measure of tax erosion is derived. That is used as a determinant of the degree of fiscal federalism. We find that an increase of economic integration causes a decline of the implicit tax rates on mobile capital and the process of tax erosion positively contributes to the growth of public sector decentralisation.


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F. Gastaldi, P. Liberati and A. Scialà, "Economic Integration, Tax Erosion, and Decentralisation: An Empirical Analysis," Modern Economy, Vol. 4 No. 10A, 2013, pp. 14-26. doi: 10.4236/me.2013.410A003.

Conflicts of Interest

The authors declare no conflicts of interest.


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