Theoretical Analysis of The Fiscal Federalism

Abstract

Fiscal decentralization concept is highly discussed at various levels and aspects, and the Organization for Economic Co-operation and Development gives it an extreme attention as well as the World Bank. There is no complete overview of the sciences literature of the fiscal decentralization and economics of federalism and, even though scholarly interest in the topic has been increasing significantly over recent years. The fiscal federalism and decentralization sciences literature is grouped into two main groups: the first generation of theory and the second generation of theory. This research aim - critically analyse the fiscal federalism first and second generation theories. This article offers a critical and in-depth review and evaluation of the important elements of current knowledge and theoretical development of fiscal federalism and decentralization.