Does fiscal federalism include local governments?

When applied to the United States, fiscal federalism typically includes local governments in addition to the federal government and state governments. In the fiscal federalism framework, the fact that local government powers are not constitutionally independent is irrelevant.

What is fiscal federalism?

As a subfield of public economics, fiscal federalism is concerned with "understanding which functions and instruments are best centralized and which are best placed in the sphere of decentralized levels of government" (Oates, 1999).

What is an example of fiscal federalism?

The way these different levels of government interact with each other is an example of fiscal federalism. For example, the federal government may provide funding to the state governments for certain projects, such as building a new highway.