Democratization, Secessions, and Fiscal Institutions

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SBR-9511420 Alberto Alesina, Harvard University The proposal seeks to support ongoing NSF-supported research on the optimal size and composition of fiscal jurisdictions. The main idea is that there is a tradeoff between large and small governments: large governments can provide many public goods more efficiently, but small government units can more closely mirror the preferences of their citizens. Secessions and unions allow citizens to choose the size of their political units. The questions raised have obvious bearing on such issues as: the degree of fiscal and monetary coordination within the European Union, the sudden disintegration of the Soviet Union and Yugoslavia, the split-up of Czechoslovakia, the re-unification of Germany, the growing separatist movements in Canada, and the movement to transfer many fiscal programs-- from environmental regulation to Medicare-- from the US federal government to the states.