Economic stimulus measures in the pandemic: the role of fiscal decentralisation

Elgin C., YALAMAN A., Yaşar S.

Cambridge Journal of Regions, Economy and Society, vol.16, no.1, pp.167-184, 2023 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 16 Issue: 1
  • Publication Date: 2023
  • Doi Number: 10.1093/cjres/rsac047
  • Journal Name: Cambridge Journal of Regions, Economy and Society
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, Business Source Elite, Business Source Premier, EconLit, Geobase, Political Science Complete
  • Page Numbers: pp.167-184
  • Keywords: COVID-19, fiscal federalism, fiscal policy, monetary policy, pandemic, E50, E60, H70
  • TED University Affiliated: Yes


Is fiscal federalism associated with economic policy responses and stimulus measures adopted by national and sub-national governments to mitigate the adverse economic effects of the COVID-19 pandemic? In this paper, we provide empirical evidence that it indeed is. Our results indicate that even after controlling for various relevant factors, countries with fiscally federal (decentralised) governments have adopted larger fiscal and macro-financial policy packages (as a percent of GDP). However, there are no significant differences in monetary-policy responses between centralised and decentralised governments. We also show that these results are robust to using different federalism measures, including different sets of control variables and different econometric specifications that include an instrumental variable estimation.