Abstract
This study investigates the effects of decentralization on output growth in the case of South Asian countries over the period of 1996 to 2018. Further, the study investigates the existence of complementarities between fiscal decentralization with the quality of institutions and macroeconomic stability is affecting economic growth. In order to obtain some flawless results, the study uses a more state-of-the-art technique. The results of Westerlund's co integration test confirm the existence of a long run equilibrium between economic growth and its determinants such as decentralization, human capital,investment, budget deficit, trade openness, governance, and macroeconomic stability. The results of the CS-ARDL method confirm that fiscal decentralization is positively linked with growth, as suggested by the theory. The results further show that the decentralization - growth nexus is strengthened with the improvement in governance and macroeconomic stability. Hence,it is not only fiscal decentralization but its interaction with other factors that enhance output growth.
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