Size matters: An Index on Regulation and Public Sector at Decentralized Levels of Government

The aim of this study is to analyze the behaviour of governments at sub national levels and their influence on economic activity. Two aspects of public sector intervention in the economies of Spain's Regions have been studied: on one hand, the dimension of its public administration, its role in the distribution of public property and merit goods and the financing instruments used for such. Secondly, regulation of economic activities carried out by the Regions; in other words, the design of self-regulatory systems within the frameworks of the EU and Spain. In this paper we made an Economic Freedom Index on Spain's Regions. The international indexes of economic freedom have become very useful tools for the study of comparative economic policies since they allow analyzing correlations between regulatory framework and growth rates. A few indexes of economic freedom applied to different regions at sub national level has been made but has not been done -so far- a study of its kind in Europe. One of the basic requirements for this type of indexes is that the regions have a high degree of autonomy in the field of economic policy. This is the case in Spain, where the autonomous regions have significant fiscal and regulatory powers.