We develop an endogenous growth model with public consumption and infrastructure services provided by two-tier governments. Growth performance and welfare implication are compared under the centralized and decentralized fiscal federal systems. In general, there is a trade-off between welfare and...

The state has played a major role in the most important developmental successes. This paper discusses the advances in our understanding of the role of the state in the developmental process over the past thirty years, and the contribution to those advances played by changes in economics, changes...

China's fast growth has been accompanied by rising regional inequality, triggering debate over a policy trade-off between aggregate growth and equity. We set out a three-region model of China in which local government behavior affects local TFP dynamics, and regional inequality itself generates...

We develop a model of policy experimentation in federal systems in which heterogeneous districts choose both whether to experiment and the policies to experiment with. The prospect of informational spillovers implies that in the fi rst best the districts converge in their policy choice....

While the association between economic freedom and long-run economic growth is well documented, the parallel research literature on the distributional consequences of economic freedom is full of conflicting findings. In this paper, we take a step towards reconciling the two literatures by...