Research Repository

Incomplete Contracts and the Evolution of Canadian Federalism

Grewal, Bhajan (2010) Incomplete Contracts and the Evolution of Canadian Federalism. Public Finance and Management, 10 (1). pp. 80-116. ISSN 1523-9721

Full text for this resource is not available from the Research Repository.

Abstract

Even though the British North American Act 1867 established the Canadian federation with a dominant federal government, Canadian provinces today enjoy much greater fiscal autonomy than they inherited from the constitution. Provincial governments have access to virtually all taxes, raise more in tax revenue than the federal government and enjoy a high degree of autonomy in respect of priorities for public spending. Canada’s fiscal decentralization is in contrast to Australia’s experience, which has evolved over time towards greater fiscal centralization. This paper examines the evolution of Canadian federalism from the perspective of incomplete contract theory, according to which residual rights over policies are a source of political influence when negotiating intergovernmental fiscal arrangements. In both countries, federal and subnational governments have been engaged in the same kind of conflict for greater power over policies. The difference between the two countries has been, however, that unlike the Australian States, the Canadian Provinces have successfully resisted the pressures put by the federal government and have regained their fiscal power that was once lost in the wake of the Second World War.

Item Type: Article
Uncontrolled Keywords: ResPubID20508, Canadian federalism, evolution, fiscal decentralization, incomplete contract theory
Subjects: Faculty/School/Research Centre/Department > Centre for Strategic Economic Studies (CSES)
FOR Classification > 1502 Banking, Finance and Investment
SEO Classification > 9104 Management and Productivity
Related URLs:
Depositing User: VUIR
Date Deposited: 27 Aug 2012 05:13
Last Modified: 27 Aug 2012 05:13
URI: http://vuir.vu.edu.au/id/eprint/7278
ePrint Statistics: View download statistics for this item

Repository staff only

View Item View Item

Search Google Scholar