ALBANIA’S LEVIATHAN GOVERNMENT: COULD IT REALLY EXIST?

The paper aims to test whether the local revenue collection contributes to a smaller government in Albania. The analysis allows us to understand whether the revenue decentralization is an efficient restraint on the Leviathan behaviour of government in terms of a small open emerging-market economy. Albania is a post-communist country with new democracy. The methodology of empirical analysis is based on the regression of time series data. The regression model is specified to link the total government revenue as a proxy for government size and the local revenues as a proxy for fiscal decentralization. The results do not confirm the hypothesis for restrictive effects of the decentralized revenue collection on the total government revenue.