Interregional disparities in productivity and the choice of fiscal regime

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

Two districts with divergent productivity levels engage in policy-making on the provision of local public goods that enhance future income and hence create a dynamic linkage across periods. The policy choices of district representatives are derived under alternative fiscal systems, and the relative merits of the systems are evaluated. It is predicted that a decentralized system is more likely to be selected in a more equal society. On the other hand, when a great deal of benefit spills over from a local public good, or when policy makers are expected to care solely about the immediate effects of their decisions on their districts, a centralized system is more likely to be selected.

Original languageEnglish
Pages (from-to)383-409
Number of pages27
JournalJournal of Public Economic Theory
Volume11
Issue number3
DOIs
Publication statusPublished - 2009 Jun 1
Externally publishedYes

ASJC Scopus subject areas

  • Finance
  • Sociology and Political Science
  • Economics and Econometrics

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