IEB Report

Fiscal Federalism ObservatoryTax Systems Analysis

Singular Sub-Central Financing Models

IEB Report 2/2025: Singular Sub-Central Financing Models

Well-designed federal government structures manage to reconcile the centralized provision of pure public goods (Federalist Papers, No. 30) with improvements in allocative efficiency through the decentralized provision of other public goods (Oates, 1972). In Spain, the best recent example of the provision of pure public goods – including collaboration with a supranational level of government, i.e. the EU – was the management of COVID-19 (e.g. the provision of vaccines or granting of financial aid to the hardest-hit economic sectors). As for the latter case, Espasa et al. (2017) found that decentralization of welfare state policies led to improvements in public satisfaction.