Theme/Relevant Ministry:

PUBLIC EXPENDITURE
FBR, M/o Finance

Project Brief:

The project aims to study the Leviathan Hypothesis of Fiscal centralization and decentralization on Pakistan’s fiscal health. It would draw from past data publications starting from 1981. Firstly, we would measure how much fiscal autonomy has existed over the years and be able to class in various segments of Fiscal decentralization which may exist over those periods.

Once done we can then analyze those segments with Fiscal health i.e. ability to match expenditures to revenue and also the distributional effect to measure inclusivity and provision of merit goods and public goods. For the former we will analyze expenditure and revenue sides. For the latter we shall see the composition of the revenue.

The study will review the size of Government through expenditure side and will help policy makers see effects of fiscal decentralization on human resource development and economics governance in turn helping plan sustainable budgets, and reduce excessive borrowing. The study will capture the actual benefits of fiscal decentralization as the correct counterfactual to centralized system of resource allocation in terms of efficient public service delivery. The outcome of this study will help decision makers to evaluate whether fiscal decentralization will be beneficial for the country and the extent to which fiscal decentralization can be put into effect in Pakistan.

Public Policy Relevance:

The research aims to study the impact of fiscal centralization and decentralization on financial health i.e., Pakistan governments ability to plan, manage, and pay for public services and investments. The outcome of this study will help the decision-makers to evaluate whether fiscal decentralization will be beneficial for the country and the extent to which fiscal decentralization can be put into effect in Pakistan.