theoretical analysis of equalization and spatial location efficiency petchey j theoretical analysis of equalization and spatial location efficiency regional studies this paper shows that regional economies such as federations or unitary countries with sub national governments may need a system of optimal inter regional transfers to correct for various types of externalities related to factor mobility and location decisions it is then argued that equalization schemes that take account of the differing expenditure and revenue needs of regions create a pattern of inter regional transfers of income but that they are inconsistent with what is required for spatial efficiency therefore equalization is incompatible with the efficient spatial allocation of mobile factors of production it is also shown that regions have an incentive to act strategically over equalization and distort their provision of local public goods petchey j une analyse theorique de l egalisation et de l efficacite de la localisation geographique regional studies cet article cherche a demontrer qu

an estimate of the welfare gain from fiscal equalization in the last several years it has become a commonplace in canadian economics that intergovernmental grants may be necessary in a federal state to prevent inefficiencies in the geographic allocation of factors of production this paper uses winer and gauthier s recent results on fiscally induced interprovincial migration to estimate both the actual and potential efficiency gain produced by the current equalization program these are found to be a minute fraction of the program s cost une evaluation des gains d efficacite engendres par la perequationfiscale depuis plusieurs annees la science economique canadienne admet que les subventions intergouverne mentales sont sans doute necessaires dans un etat federal pour eviter toute inefficacite dans la repartition geographique des facteurs de production le present article s appuie sur les resultats recents de winer et gauthier au sujet des migrations interprovinciales induites par des incitations fiscales pour evaluer les gains d efficacite reels et potentiels decoulant du programme de perequation en vigueur i1 s avere que ceux ci representent une fraction infime des cofuts du programme the idea that decentralized fiscal systems may give rise to inefficient migration is by now well established in the literature on fiscal federalism so too is its corollary that a system of grants can be used to neutralize such inducements to inefficiency the seminal contribution to the literature is buchanan s 1950 paper on fiscal equity buchanan argued that in order to achieve both horizontal equity and least price distortion in a federal state it would be necessary to neutralize any differences across jurisdictions in the fiscal treatment of individuals the intuition of the argument is simple if bi is the per capita benefit created by provincial expenditures in province i ti the per capita tax burden and mpi the marginal product of labour in province i then for any i j mpi mpj a necessary condition for the maximization of national

on the form of the locational efficiency condition in local public goods models this paper clarifies the treatment of congestion costs in models with migration and impure public goods in particular it is shown that the proposition that the form of the locational efficiency condition is independent of the level of public good provision depends critically on the measure of congestion costs that is used and does not hold in general

leviathans federal transfers and the cartelization hypothesis federal fiscal arrangements are argued to give rise to tacit collusion among competing leviathans brennan and buchanan the power to tax cup 1980 though frequently encountered in academic and policy discussions the cartelization hypothesis has rarely been scrutinized formally this paper explores the effect of federal equalizing transfers on leviathans engaged in tax competition contrary to the hypothesis equalization is found to potentially complement tax competition in taming the leviathan by implicitly taxing tax revenues extracted by the leviathan thus transfers might be an appropriate constitutional provision against fiscal expropriation

efficiency and equalization payments in a federal system of government a synthesis and extensions of recent results this paper investigates the rationale for a system of equalization transfers in a federal system of government the existing sources of inefficiency of resource allocation in economies with more than one level of government are synthesized in the framework of a simple decentralized multiprovince model with mobile factors of production the sources of inefficiency arise first because migrants respond at the margin to incorrect signals owing to the phenomena of rent sharing and fiscal exterality and second because of global rather than local inefficiencies the model is then extended to consider the role of the federal government in providing intergovernmental transfers in the face of such inefficiencies in addition to synthesizing the sources of inefficiency in federal models the equity arguments for equalization are briefly recounted efficacite et paiements de perequation dans un systeme federal de gouvernement synthese et extensions de certains resultats recents ce memoire examine la logique qui soustend un systeme de paiements de perequation dans un systeme fdderal de gouverement les auteurs utilisent un modele simple d un systeme multi provincial decentralise avec des facteurs de production mobiles pour definir les sources d inefficacite dans l allocation des ressources dans les dconomies qui possedent plus d un niveau de gouvernement ces inefficacites proviennent de ce que d abord ceux qui se deplacent le font en reponse a la marge a des signaux incorrects engendres par le partage de la rente sur la base de la residence et par les phenomenes d exteralites fiscales elles sont aussi le resultat d inefficacites globales plutot que locales dans le cadre de ce modele les auteurs analysent le role du gouvernement federal effectuant des transferts inter gouverementaux pour corriger ces inefficacites en plus de presenter une synthese des sources d inefficacite dans les regimes federaux les auteurs font un bref rappel en passant a l ensemble des arguments fondes sur l equite qu on utilise pour rationaliser les paiements de perequation this paper is a linear combination of two papers presented at the may 1982 meetings of the canadian economics association in halifax entitled the case for equalization payments by the authors and recent developments in the theory of regional economic policy in canada by boadway the authors are grateful for comments by the discussants jim johnson and baxter macdonald and by jack mintz brian scarfe gerard belanger david sewell tom courchene and the referees we are especially heavily indebted to dan usher for many stimulating comments and suggestions while the work was in progress some of the above persons will undoubtedly disagree with the emphasis we have chosen to put on various aspects of the analysis for policy purposes support for some of this work has been provided by the economic council of canada and is gratefully acknowledged canadian journal of economics revue canadienne d economique xv no 4 november novembre 1982 printed in canada imprimd au canada 0008 4085 82 0000 0613 01 50 1982 canadian economics association this content downloaded from 207 46 13 127 on wed 12 oct 2016 04 27 47 utc all use subject to http about jstor org terms 614 robin boadway and frank flatters

political competition and voter mobility the existing model of political competition is extended to allow voters to live in different regions and to migrate between regions in response to an inter regional transfer policy we then show that regions have a different weight in the expected vote function of political parties this gives parties an incentive to bias the transfer policy in favour of relatively high weight regions with potentially adverse efficiency and equity effects however we then show that parties always propose efficient and equitable regional transfers regardless of whether regions have different weights if there is some mobility of citizens across regions mobility constrains parties to act efficiently and equitably even though they face an incentive to act otherwise however when voters are immobile political competition leads to inequitable though efficient outcomes

reassessment of the tiebout model abstract the tiebout model has been the reference point for the classical approach to fiscal federalism its emphasis on mobility benefit taxation and the advantages of fiscal competition have informed fiscal federalism since the seminal contributions of musgrave and oates this paper reviews the influence that the tiebout model has had on fiscal federalism and argues that while its insights remain relevant for local government it is far from compelling as a positive description of or a normative prescription for fiscal federalism at the state level some aspects of alternative approaches are presented which lead to different perspectives than tiebout inspired ones

factor mobility and income redistribution in a federation abstract jurisdictions in a federation redistribute income by taxing capital and providing transfers to labor capital and labor move to earn higher returns net of taxes or gross of transfer benefits between jurisdictions in determining its redistributive policy the government for each jurisdiction thus takes into account the effects of its policy on the movement of factors from and to the jurisdiction hence the extent of redistribution depends on the mobility of factors the mobility of capital or labor leads to less redistribution than under autarky however mobility of both capital and labor may lead to more redistribution than if only capital moves as a consequence increased mobility of factors is not necessarily harmful to redistribution

income redistribution in a common labor market when households are mobile among jurisdictions income redistribution by individual jurisdictions creates fiscal externalities a model of interjurisdictional migration is used to study the nature of this redistributive externality analysis of optimal redistribution and optimal corrective subsidies from higher level governments shows that benefit levels for the recipients of income transfers and tax rates on mobile taxpayers should be equalized across jurisdictions a system of jurisdictions with a common labor market can achieve welfare improvements through coordination of domestic redistributive policy or through the intervention of a higher level government copyright 1991 by american economic association

the interprovincial migration of canadian physicians does income matter this study applies a multinomial logit model of human capital migration to examine the factors influencing the movement of physicians within canadian provinces between 1976 and 1992 the empirical investigation covers general practitioners and specialists it excludes interns residents between seven regions atlantic canada quebec ontario manitoba saskatchewan alberta and british columbia the results suggest that differences in real income have a positive and significant effect on a physician s decision to migrate form one province to another provinces with the highest after tax income highest expenditure per physician and highest fee per service rates have the highest net rate of in migration income differences are however not the only factor influencing a physician s choice to move working conditions within a province which we proxy with the number of hospitals beds and health expenditures per capita are also important factors likewise the ratio of rural to urban population distance b

fiscal externality rent sharing and equalisation transfers in japan this article describes a quantitative analysis of japanese equalisation transfers based on the fiscal externality models of hartwick boadway and flatters in particular it examines whether the actual level of equalisation transfers matches the theoretically optimal level from the efficiency point of view although the purpose of interregional fiscal transfer is not necessarily in the pursuit of an efficient allocation of resources equalisation transfer surely affects it it is often said in japan that the equalisation transfer may distort efficiency too much and that it is one of the causes of serious fiscal conflict between the metropolitan area and local rural prefectures the quantitative results show that the actual amount of transfers from resource rich to resource poor prefectures was below the optimal level in the 1980s however the resource poor prefectures have received an excessive transfer after 1990 specifically the direction of the optimal transfer might change in the second half of t

from theory to practice canadian economists contributions to public finance we survey canadian economists contributions to the field of public finance from the mid 1980s to 2016 we highlight the development and extension of the models and tools of public economics and the empirical studies that have deepened our understanding of the efficiency and distributional issues over a wide range of public finance issues we also highlight contributions to the development of policies through commissioned reports and the important role that canadian institutions the canadian tax foundation the think tanks and the federal and provincial departments of finance have played in shaping tax and fiscal policies de la theorie a la pratique contributions des economistes canadiens a la finance publique on examine les contributions des economistes canadiens au domaine de la finance publique du milieu des annees 1980 a 2016 on souligne le developpement et l extension des modeles et des outils d economie publique et les etudes empiriques qui ont aide a approfondir notre comprehension des enjeux d efficacite et de distribution dans un vaste eventail de questions de finance publique on souligne aussi les contributions des rapports commandites au developpement de politiques publiques ainsi que le role important d institutions canadiennes l association canadienne d etudes fiscales les groupes d experts ainsi que les ministeres des finances du gouvernement federal et des gouvernements provinciaux dans le design des politiques fiscales

participation fees vs reserve prices in auctions with asymmetric or colluding buyers abstract in english auctions with weak and strong buyers the equilibrium revenue arising from using the optimal reserve price is shown to be higher than the expected revenue in any intuitive equilibrium of an auction with a participation fee

ex post redistribution in a federation implications for corrective policy abstract this paper analyzes whether changes in the timing of equalizing transfers to state governments necessitate an adjustment in federal corrective policy according to the existing literature assuming an ex ante choice of transfers the corrective grant is equal to the marginal damage benefit inflicted by externality generation when the federal government accommodates state finances ex post the grant differs in formula from existing prescription allocative federal policy corrects state policy incentives twofold it entails a correction for the distortion in the marginal benefit of state spending as in earlier literature and for the distortion in the marginal cost of public funds induced by the ex post provision of transfers the required grant rule is generically disproportionate to the equilibrium externality even with lump sum taxation furthermore the ex post provision of transfers is critical for the nature of the equilibrium inefficiency equalizing transfers at least partly internalize consumption spill overs but simultaneously establishes a new source of inefficiency as a final result the existing prescription for allocative federal policy continues to apply if the public good is pure

collusive bidder behavior at single object second price and english auctions models of collusive bidder behavior at single object second price and english auctions are provided the ind ependent private values model is generalized to permit the formulatio n of coalitions and a strategic response by the auctioneer cooperati ve strategies are found to be dominant in these models coalitions of any size are viable and the payoff to each member increases with th e size of the coalition in addition the collusive strategies of the coalition represent a noncooperative equilibrium the optimal respon se of the auctioneer is to establish a reserve price that is a functi on of the coalition s size these and other features of the model are found to be consistent with the essential features of actual behavio r copyright 1987 by university of chicago press

incentive equivalence with fixed migration costs abstract if migration between communities is costless and if policy makers in each community anticipate the migration response to policy changes then the interests of the two communities are perfectly aligned decentralization is efficient this incentive equivalence is well known however the first order approach used in virtually all the literature may obscure the fact that no convexity assumptions need be made about technology or tastes this fact underscores the relevance of incentive equivalence even when there are scale economies in the public sector here the consequences of positive migration costs for this incentive equivalence are considered in contrast with much of the literature migration costs are assumed the same for everyone this formulation differs from the more common attachment to home assumption of heterogeneous migration costs conditional on the direction of migration interests of different communities are still perfectly aligned but natives of different communities may prefer different directions of migration weakening incentive equivalence if local policy makers have the power to induce large changes in migration flows however incentive equivalence fails only if economies of scale in population are important so that communities may be under populated

transboundary pollution and household mobility are they equivalent abstract recent research has shown that perfect household mobility can serve as a disciplinary mechanism inducing national policy makers to internalize interregional externalities caused by transboundary pollution this paper develops a differential game to illustrate that the result is not necessarily robust when migration costs and explicit dynamics are introduced the paper shows that if governments constantly reoptimize imperfect household mobility leads to a tragedy of the commons and individual countries overemit even when pollution is purely local moreover these dynamic externalities get worse as the degree of household mobility increases and there is a qualitative difference between almost perfect and perfect mobilty that is a discontinuity at zero migration costs

inter regional transfers and the induced under taxation of economic rents abstractinter regional transfers and the induced under taxation of economic rents regional studies this paper shows that if taxes on economic rent are assigned to anticipatory first moving regions and inter regional transfers are mandated centrally rents are under taxed relative to optimal levels this provides a possible explanation for low rent capture observed in australia and canada two resource rich federal economies that also have fiscal equalization transfers between regions

standing tiebout on his head tax capitalization and the monopoly power of local governments much of the public finance literature argues that localgovernments behave competitively due to residents ease of exitand entry the model presented here challenges this widespreadconclusion though it is costless to relocate to anotherlocality the presence of tax capitalization makes it impossiblefor land owners to avoid monopolistic pricing of public servicesby moving land owners can only choose between paying the taxdirectly or paying it indirectly in the form of a lower sale valuefor their housing if they exit in consequence the only realcheck on local governments comes through imperfectly functioningelectoral channels

looking at pro poor growth from an agricultural perspective summary pro poor growth has been identified as one of the most promising pathways to accelerate poverty reduction in developing countries the diagnostic pro poor growth toolbox has so far focused on the income dimension as well as key non income achievements in education and health this article contributes to the literature by expanding the toolbox with several new measures that take into account the extraordinary importance of agricultural productivity for poverty reduction in developing countries we distinguish between land productivity and labor productivity and find that the poor identified by low incomes poor education outcomes low land productivity and low labor productivity overlap only to a small degree suggesting that analyses of pro poor growth from these different perspectives are complementary the toolbox is then applied to three comparable household surveys from rwanda eicv data for the years 1999 2001 2005 06 and 2010 11 a country that has experienced impressive economic growth since the genocide in the mid 1990s and that has undertaken considerable efforts to increase agricultural productivity and improve the population s access to social services over the first decade of the 2000s our application shows that the enormous progress made in the income education and health dimension of well being has been pro poor according to most definitions of the concept the new tools reveal that the land productivity poor experienced pro poor growth in the relative and absolute sense while the labor productivity poor increased their labor productivity relatively but not absolutely faster than the labor productivity rich even though the former dispose of considerably lower education levels

on the desirability of tax coordination when countries compete in taxes and infrastructure in our paper we demonstrate that when countries compete in taxes and infrastructure coordination through a uniform tax rate or a minimum rate does not necessarily create the welfare effects observed under pure tax competition the divergence is even worse when the competing jurisdictions differ in institutional quality if tax revenues are used to gauge the desirability of coordination our model demonstrates that imposing a uniform tax rate is pareto inferior to the non cooperative equilibrium when countries compete in taxes and infrastructure this result is completely reversed under pure tax competition if the countries are sufficiently similar in size if a minimum tax rate is set within the range of those resulting from the non cooperative equilibrium the low tax country will never be better off finally the paper demonstrates that the potential social welfare gains from tax harmonization crucially depend on the degree of heterogeneity among the competing countries

optimal regional redistribution under asymmetric information this paper studies optimal redistribution among two different regions in a federal state regional governments supply local public goods financed with distorting local taxes they have better information on their tax bases than the federal government we model this both as an adverse selection problem on the size of local tax bases and or as moral hazard problem on local tax enforcement moral hazard alone does not affect the first best redistribution rule which is a lump sum transfer from the rich to the poor region in all other cases the optimal transfer rule involves a lump sum tax on the rich regions and a premium for fiscal effort by the poor regions with the transfer falling short of the first best level in the equilibrium with moral hazard and adverse selection tax evasion occurs only in the poor region even though the possibility of lax tax enforcement benefits the rich and harms the poor region because it reduces equilibrium redistribution this abstract was borrowed from another version of this item

rent seeking and tax competition abstract regional or local governments often appear to favour the interests of those who own land in the region here the implications of this sort of policy making are modelled formally people are assumed perfectly mobile between regions but are assumed to own land only in the region of their birth the nash equilibrium is shown to be efficient if and only if no migration of capital or labour is needed to achieve efficiency otherwise tax competition leads to too little migration voluntary inter regional transfers will never arise in equilibrium despite the inefficiency of the nash equilibrium when there is migration a higher level of government cannot alter the equilibrium if regional governments choose policies simultaneously after the federal government has committed to its policies

all equilibria of the vickrey auction abstract this paper characterizes the set of nash equilibria in the second price sealed bid auction with independent private values and three or more bidders in addition we show that any effective reserve price implies uniqueness

fiscal federalism in europe lessons from the united states experience the existing political and legal institutions of fiscal policy making are under challenge as the united states and the eastern european and soviet states experiment with policy decentralization the states of western europe are looking to a more centralized policy structure via the e e c this paper seeks to raise issues of importance to all such reform efforts notably the need to consider and balance the inefficiencies of fiscal policy decentralization spillovers and wasteful fiscal competition against the inefficiencies of fiscal policy centralization policy cycles and localized pork barrel spending and taxes the need to develop new fiscal policy institutions emphasizing voluntary agreements and responsive agenda setters is stressed robert p inman daniel l rubinfeld department of finance and economics school of law and the wharton school of management department of economics university of pennsylvania university of california philadelphia pa 19104 berkeley ca 94720 and neer fiscal federalism in europe lessons from the united states e perienc by robert p inman and daniel l rubinfeld2 in democratic and totalitarian regimes alike the existing political and legal institutions of economic policy making are under challenge the wisdom of centralized fiscal regimes is now being questioned quietly under the banner of the new federalism in the united states and vocally if not violently through the secessionist movements of eastern europe and the soviet states as these nations experiment with decentralized fiscal institutions the countries of western europe are now looking to the potential of a more centralized economic order within the new european economic community this paper seeks to raise issues of importance to all such reform efforts and within that context to offer some cautionary advise for the design of e e c fiscal institutions based upon the recent american experience with centralized fiscal policy making ii the role for central government fiscal policies in economic unions the european community s progress towards an economic and monetary union the authors wish to thank allesandra casella and barry eichengreen for helpful comments and discussions 2 the authors are professor of finance and economics university of pennsylvania and research associate of the nber and professor of law and economics university of california at berkeley respectively professor rubinfeld gratefully acknowledges the support of the center for real estate and urban economics at the university of california berkeley based upon a common currency will create new demands for the design of fiscal policy 3 perhaps most importantly with a common currency and thus a common monetary policy member states will no longer be able to influence their local economies through exchange rate or monetary policies when state specific economic shocks occur 4 state specific fiscal policies stand as an alternative three questions arise 1 can member state fiscal policies be effective in offsetting local economic shocks in an integrated economic union 2 if effective are such policies likely to be optimally managed at the state level and 3 if ineffective or non optimal what central government policies might be then preferred the recent united states experience is instructive on each point can member state fiscal policies be effective in open integrated economies deficit financed demand creation may be of only limited usefulness to small member states first the demand stimulus of deficit financing is dissipated through import demands from other union states gramlich 1987 has shown that the effectiveness of deficit policies in the smallest u s states is significantly import constrained though larger states may be able to use own deficits to affect state employment prospects second in member states the use of such deficits to combat local shocks may be significantly limited by what the capital markets will allow while deficits may be see eichengreen 1990 there is growing evidence of the economic importance of state specific economic shocks to the short run and long run prospects of states and regions in integrated economic unions see bernard and durlauf 1991 for a study of oecd countries many of which are in the eec and brown coulson and engle 1990 for a study of u s states member states which manage these shocks well are likely to enjoy higher long run growth beneficial to the local economy during downturns and while member states may promise to repay those deficits with surpluses during the upswing such promises are difficult to enforce the u s capital market has appeared reluctant to accept a state s promise of a balanced budget over a business cycle such promises lack credibility when temporary economic downturns are not easily distinguished from long run structural declines when good deficits cannot be distinguished from bad the only credible local government promise may be a balanced budget in each fiscal year the stringent u s state budgets for the recessionary 1992 fiscal year balanced through major tax increases and deep spending cuts offer evidence on the point 5 even if member state deficit policies are economically feasible their management may be non optimal in interdependent economic unions the benefits from local demand creation through deficit financing may spillover to other member states via import expansion while the interest costs of deficits remain with the borrowing state the result will be an under provision of expansionary fiscal policies by member states using the arguments of hart 1982 central government fiscal policies stand as the policy

efficient local charity with self selection how is charitable giving within a city influenced by the prospect of donor and recipient migration the theoretical literature on charitable contributions in a closed economy has mainly argued that the market level of private giving will tend to be lower than optimal wherever there exists a local fiscal externality between donors and recipients interjurisdictional models of voluntary redistribution on the other hand abstract from altruism to explore the interjurisdictional fiscal externality resulting from the failure of one community to account for the migration impacts of its actions on other communities this paper integrates and extends both literatures by allowing for local altruism among the mobile residents of a system of local economies within a single community mobility thus introduces adverse selection considerations for each donor via the migration of both recipients and other donors moreover any change in the local transfer level influences both equilibrium wages and donor behavior system wide

fiscal federalism in europe in democratic and totalitarian regimes alike the existing political and legal institutions of economic policy making are under challenge the wisdom of centralized fiscal regimes is now being questioned quietly under the banner of the new federalism in the united states and vocally if not violently through the secessionist movements of eastern europe and the soviet states as these nations experiment with decentralized fiscal institutions western europe is now looking to a more centralized economic order within the new european economic community this paper seeks to raise issues of importance to all such reform efforts and within that context to offer some cautionary advise for the design of e e c fiscal institutions

redistribution within and across the regions of a federation the authors reconsider the literature on redistribution within a federation with mobile agents they conclude that redistribution is a function best assigned to the national government local governments with diverse preferences for redistribution distort individual migration decisions the authors also examine the fiscal externality literature which has made an efficiency argument for interregional transfers they show that if local governments have the same preferences for redistribution the nash equilibrium is efficient if preferences are diverse the authors show that nationally imposed interregional transfers do not address the source of the inefficiency nevertheless interregional transfers are shown to be a part of decentralized behavior

optimality free mobility and the regional authority in a federation abstract this paper examines the efficiency properties of a federation characterized by strategically competing regions and freely mobile homogeneous individuals analyses of this economy have concluded that achieving a pareto optimal will require intervention by a national authority this paper makes one basic point the nash equilibrium of regional authority behavior is pareto optimal the implication is that there is no role for a national authority in either providing interregional transfers or correcting for decentralized provision of public goods the nash equilibrium involves samuelson public goods provision and regions purchasing preferred population distributions with optimal interregional transfers

the impressive contribution of canadian economists to fiscal federalism theory and policy the study of fiscal federalism has been central to the research of canadian economists since the rowell sirois report to mark the 50th anniversary of the founding of the canadian economics association it is fitting to take stock of their contributions we focus on the period since 1982 and emphasize the main scholarly publications of an inclusive array of canadian economists and economists in canadian universities our attention is devoted to applications in the context of federal and provincial governments setting aside related issues in municipal government finance we briefly discuss instances where the fiscal federalism literature has informed policy debates including through policy research institutes government commissions and international organizations la contribution impressionnante des economistes canadiens a la theorie et a la politique du federalisme fiscal l etude du federalisme fiscal a ete un element central de la recherche des economistes canadiens depuis la commission rowell sirois au moment de celebrer le 50eme anniversaire de la fondation de l association canadienne d economique le moment est approprie pour prendre la mesure de leurs contributions on se concentre sur la periode apres 1982 et on souligne les principales publications savantes d un ensemble inclusif d economistes canadiens et d economistes dans les universites canadiennes une attention particuliere est portee aux applications dans le contexte federal et provincial mettant de cote les enjeux relies a la finance municipale on discute brievement des instances ou la litterature sur le federalisme fiscal a eclaire les debats de politiques publiques y compris a travers les instituts de recherche sur les politiques publiques les commissions gouvernementales et les organisations internationales

resource management and the mayor s guarantee in french water allocation this paper uses standard methods in stochastic calculus tomeasure the cost of the agency conflict that pits electedofficials of french municipalities against the communities theyrepresent in the management of the water supply under the frenchlegal code the municipalities are responsible for the watersupply and the elected officials are personally liable for anydamage due to negligence on their part uncertainty regardingexactly how negligence will be defined by the courts puts theelected officials in a precarious position by delegatingauthority to an oligopoly of private firms however electedofficials can eliminate their personal liability which istransferred to the delegated firm many studies argue thatdelegation locks communities into long term contracts that areagainst their better interests thus the agency conflict mayaffect the delegation decision to the detriment of the community to determine whether or not this is true it is necessary to knowthe economic cost of the mayor s personal liability

taxation and the tiebout model the differential effects of head taxes taxes on land rents and property taxes on the theory of state and local public finance is the seminal paper by charles tiebout 1956 tiebout constructed a multijurisdictional model in which independent local governments offer a wide variety of expenditure and tax policies and perfectly mobile consumers reveal their preferences for local public goods through their choice of residential community he argued that under such circumstances local public service provision would be efficient the tiebout model has formed the basis of a vast number of subsequent articles in the state and local public finance literature and has also been very influential in urban and regional economics the efficiency properties of various tiebout type models of local public good provision have been examined and the role of politics in these models has been debated at length in this literature of more direct relevance to this paper however is the fact that although tiebout had little to say directly about taxation simply assuming the existence of head taxes subsequent analyses have used adaptations of this model to examine the effects of local head taxes land taxes and property taxes it is the literature on the efficiency and distributional effects of alternative local taxes that is the subject of this survey 1

controlling collusion in auctions the role of ceilings and reserve prices abstract we examine a simple model of collusion under a single object second price auction under the appropriate parameter conditions in particular as long as collusion is neither too easy nor too difficult we find that the optimal policy involves both an effective ceiling as well as a reserve price set at the lowest bidder valuation

uncertain income and redistribution in a federal system abstract this paper considers income redistribution in a federal system where regions experience random shocks federal redistribution serves as insurance against jurisdiction specific shocks but provides a uniform assistance to the poor and cannot suit individual jurisdictions demands for redistribution consequently whether the federal government should redistribute depends on the advantage of pooling the risk and the disadvantage of compromising different preferences for redistribution with mobile individuals federal redistribution loses its advantage because migration ensures the equalization of factor incomes between regions and because even local redistribution serves as insurance however local redistribution creates fiscal externalities and distorts the allocation of labor

risk sharing in a federation with population mobility and long horizons in this paper risk sharing among individuals within and across regions in a federation with population mobility and infinite horizons is considered it is shown that the regional authorities will not fully exploit gains from interregional risk sharing when population mobility is imperfect in the nash equilibrium there is complete risk sharing among the individuals within each region however which corresponds to the policies of the central authority regional authorities who care about their reputation may be able to commit to an efficient allocation it is possible that improvements in the degree of mobility will make such commitments less likely jel classification h77 e61 and f36 le partage du risque dans une federation ou la population est mobile et l horizon temporel long ce memoire examine le partage du risque entre personnes a l interieur des regions et entre regions dans une federation ou il y a mobilite de la population et horizon temporel infini on montre que les autorites regionales n exploiteront pas pleinement les gains en provenance d un partage inter regional du risque quand la mobilite de la population est imparfaite cependant dans un equilibre a la nash il y a partage complet du risque entre les individus de chaque region ce qui correspond aux politiques des autorites centrales les autorites regionales qui tiennent a leur reputation peuvent etre capables de s engager a une allocation efficace il est possible que les ameliorations dans le degre de mobilite rendent ces engagements moins probables

competing in taxes and investment under fiscal equalization the paper considers a model of federation with two heterogeneous regions that try to attract the capital by competing in capital income taxes and public investment that enhance the productivity of capital regions choices determine allocation of capital across the regions and their revenues under a tax sharing scheme this framework allows for the examination of different approaches to fiscal equalization schemes boadway r flatters f 1982 efficiency and equalization payments in a federal system of government a synthesis and extension of recent results canadian journal of economics 15 613 633 weingast b r 2006 second generation fiscal federalism implication for decentralized democratic governance and economic development working paper hoover institution stanford university we show that tax competition distorts downwards public investments and that the equalization grants discourage public investments with a little effect on equilibrium taxes however the equalization schemes remain beneficial not only for the federation and under a low degree of regional asymmetry also for each region c 2008 elsevier b v all rights reserved

fiscal equalization and composition of subnational government spending implications for regional convergence this study examines the impact of fiscal equalization payments on the composition of government spending under endogenous growth theory analytical conjectures stemming from the model are tested em

fiscal flows in the united states and canada lessons for monetary union in europe regional flows of federal taxes and transfers within the united states and canada are used to analyze long term fiscal flows the redistributive element and short term responses to regional business cycles the stabilization element in the united states long run flows amount to 22 cents in the dollar while the stabilization effect is 31 cents in the dollar in canada the redistributive effect is larger 39 cents and the stabilization effect smaller 17 cents federal flows appears to depend on the institutional structure of the country concerned however in both countries the redistributive element is considerably larger than the amounts involved in the ec structural funds program as for stabilization national fiscal policies in the ec appear to have been as effective as federal governments in the united states and canada in cushioning shocks to incomes

buy out prices in auctions seller competition and multi unit demands online auction sites often enable sellers to add a buy out price in one shot auctions this has been motivated by appeal to impatience or risk aversion we offer additional justification in a dynamic model by showing that an early seller has an incentive to use a buy out price if a similar product is offered later by another seller and bidders desire multiple objects revenue in the first auction increases but revenue in the second auction decreases as does the sum of revenues the buy out price causes the auction sequence to become inefficient because the first item may be awarded to a bidder who should have received none

redistributive policy with labour mobility across countries it is generally believed that international labour mobility lowers the level of redistribution each country wishes to undertake this paper considers a model with two countries where each government redistributes income between two types of individuals using a general equilibrium model it is shown that there are situations where the level of redistribution in one of the two countries is in fact higher than in the absence of individual mobility this higher level of redistribution is explained by the migration induced changes in the structure of the population in both countries namely by the increase in the proportion of high income individuals in the country that may experience excessive redistribution

farmers health and agricultural productivity agriculture is one of the most hazardous productive sectors around the world most previous studies have focused on health issues of farmers in developing countries while little attention has been paid to farmers health problems in developed countries the present study assesses the effect of farmers health conditions on agricultural productivity in norway employing stochastic frontier regression techniques we conclude that differences in farmers health help to explain the variance in agricultural production efficiency

ex post liability for harm vs ex ante safety regulation substitutes or complements this paper concerns the regulation of hazardous economic activities economists have generally viewed ex ante regulations safety standards pigouvian fees that regulate an activity before an accident occurs as substitutes for ex post policies exposure to tort liability for correcting extemalities this paper shows that where there is uncertainty there are inefficiencies associated with the exclusive use of negligence liability and that ex ante regulation can correct the inefficiencies in such a case it is efficient to set the safety standard below the level of precaution that would be called for if the standard were used alone jel 619

municipal capital maintenance and fiscal distress this paper formalizes and empirically tests the hypothesis that the deficient maintenance of public infrastructure is caused by fiscal distress the authors utilize a production decision framework in which public officials combine maintenance and new capital to produce a desired level of capital services the behavior implied in the fiscal distress hypothesis is treated as perverse deviations from the optimal production path the empirical findings from cross sectional expenditures data give support to the fiscal distress hypothesis copyright 1991 by mit press

on distinguishing between leviathan and public interest governments in a federal state the purpose of this paper is to derive testable implications for the proposition that provincial governments in a specific federal system are leviathans that is revenue maximizers the leviathan model associated with brennan and buchanan 1980 hypothesizes that governments behave like monopolies who seek to maximize their revenue this model is contrasted with an alternative hypothesis the public interest theory a theoretical model of a federal state based on the canadian system is constructed and testable implications are derived the principal feature of the model is that it is set in the context of a particular game involving the federal government provincial governments and a consumer in attempting to model this situation care has been taken to try to incorporate as many institutional features of the canadian federal system as possible while still allowing the model to be somewhat parsimonious with some modification the model may be applicable to other countries with similar federal systems

convergence and migration among provinces have regional disparities in canada changed over the past thirty years this paper assesses the robustness of earlier findings of convergence in the levels and growth rates of provincial per capita gdp and then estimates the extent to which interprovincial and international migration is being influenced by regional differences in incomes and employment excerpt

devolution grants and fiscal competition following half a century of fiscal activism and federal leadership the call now is for downsizing the federal budget and a devolution of fiscal responsibilities to states and localities the call for federalism meant to secure a stronger center in james madison s time now seeks to decentralize this paper outlines the main features of fiscal federalism as i see them sketching a vision which differs in major respects from that offered by the lead paper in this symposium first i highlight the role of distribution which i see as a central function then i focus attention on grants in aid and their role in the federal system finally i consider competition cooperation and coordination between jurisdictions

spatial inequality and development is there an inverted u relationship abstract this paper studies the hypothesis of an inverted u shaped relationship between spatial inequality and economic development the theory of kuznets 1955 and williamson 1965 suggests that spatial inequality first increases in the process of development and then decreases to test this hypothesis i have used a unique panel data set of spatial inequalities in 56 countries at different stages of economic development covering the period 1980 2009 parametric and semiparametric regressions are carried out using cross section and unbalanced panel data the results provide strong support for the existence of an inverted u i also find some evidence that spatial inequalities increase again at very high levels of economic development

interregional spillovers in the presence of perfect and imperfect household mobility abstract when households are immobile across regions the decentralized provision of public goods that generate interregional benefit spillovers is inefficiently low we analyze this problem in an environment of interregional household migration and obtain the following results if households are perfectly mobile across regions then the decentralized provision of public goods generating spillovers is socially efficient there is no need for central government intervention if households are attached to particular regions for cultural or nationalistic reasons however at least one of two regions undersupplies the public good central government intervention can enhance efficiency

raising taxes through equalization a simple theory suggests that a common form of federal horizontal equalization grants should cause subnational governments to levy higher tax rates distorting local tax bases and so increasing federal transfers to test this i examine canadian provincial tax policies in the 1972 2002 period consistent with the theory provinces respond to expansions of equalization transfers by increasing their own tax rates i estimate that on average tax rates in grant receiving provinces were substantially and significantly higher as a consequence of the transfer formula jel classification h21 une theorie simple suggere qu une forme usuelle d octrois federaux de perequation horizontale devrait entrainer les gouvernements sub nationaux a imposer de plus hauts taux d imposition modifiant ainsi les bases de fiscalite locale et ce faisant accroissant les transferts federaux pour mettre au test cette hypothese on examine les politiques fiscales des provinces canadiennes pour la periode entre 1972 et 2002 d une maniere qui semble supporter l hypothese les provinces ont repondu a un accroissement des transferts de perequation en accroissant leur propre taux d imposition on estime que les taux moyens d imposition dans les provinces qui recoivent des transferts sont plus eleves de maniere substantielle et significative en raison de la formule de transferts

ex ante free mobility ex post immobility and time consistency in a federal system abstract this paper examines regional population distribution when there is an interregional transfer policy without commitment we introduce explicitly the following time structure of actions individuals assumed to be identical make decisions on locational choices freely ex ante but are immobile ex post the fiscal policies of the local governments and the central government are implemented after individuals migration decisions the basic result is that locally stable no commitment equilibria are single community equilibria when there is a pure local public good we then illustrate the possibility for the interregional transfer policy to reduce the efficiency of population distribution

migration and the public sector a survey charney a h 1993 migration and the public sector a survey reg studies 27 3133 326 a review of the existing literature on human migration reveals relatively few studies that explicitly examine the relationships between public policy decisions and human migration flows the surveyed literature includes studies of national policies such as defence spending migration subsidies and intergovernmental transfers as well as sub national policies such as welfare and unemployment benefits state and local taxes education and other public services suggestions for incorporating public sector information into existing migration analysis frameworks and further areas of research are provided charney a h 1993 la migration et le secteur public une etude reg studies 27 313 326 faire la critique de la documentation disponible sur la migration humaine laisse voir que rares sont les etudes traitant explicitement des rapports entre la politique d etat et les flux migratoires la documentation examinee c

migration with fiscal externalities abstract this paper analyses the distribution of a country s population among regions when migration involves fiscal externalities the main question addressed is whether a decentralized decision making of regional governments can produce an optimal population distribution as recently asserted or a centralized intervention is indispensable as argued before in the literature in analysing this issue it is assumed that migration is costly and accordingly the problem is modelled in a dynamic setup it turns out that while with costless mobility the fiscal externality is fully internalized by voluntary interregional transfers with costly mobility centrally coordinated transfers still remain indispensable for achieving the socially optimal allocation

inter regional insurance this paper considers the problem facing a central government which can insure regional governments by use of intergovernmental grants against region specific and privately observed shocks either to income or demand for or cost of the public good notable results are i depending on the source of the shock the grant may induce over or undersupply of the public good relative to the samuelson rule ii with public good spillovers between regions there is two way distortion of public good supply that is qualitatively different distortions relative to the samuelson rule for different values of the shock iii the solution to the central government s problem may depend qualitatively on whether regional taxation is lump sum or distortionary 1999 elsevier science s a all rights reserved

evaluating the efficiency and equity of federal fiscal equalization abstract theoretically federal transfers that make household location decisions efficient should ignore local cost differences subsidize positive externalities and offset differences in federal tax payments and local taxes levied on non residents but not local tax revenues from residents transfers that redistribute resources equitably across regions will likely target areas with individuals of low earnings potential or low real incomes applying these criteria empirically canadian equalization policy appears neither efficient nor equitable but exacerbates pre existing inefficiencies and underfunds minorities locational inefficiencies cost canada 0 41 of income annually and cause over funded provinces to have populations of 30 beyond their efficient long run levels

on models with an uncongestible public good and a continuum of consumers abstract this short note shows that models with an uncongestible or mildly congestible public good and a non atomic continuum of consumers have an interesting but unfortunate property only an infinite level of public good provision in the continuum economy can be approximated by feasible public good levels in a sequence of economies with finite populations we discuss the theoretical and practical problems this creates for familiar models that employ a continuum of consumers and a finite level of an uncongestible public good

designing tax policy in federalist economies an overview abstract the emerging economic federations of the european union russia and south africa along with the established federations in australia canada and the united states confront the task of designing the institutions for federal fiscal policy this paper reviews the literature on the design of tax policy in federalist economies we conclude that taxation by lower level governments can lead to significant economic inefficiencies and inequities the usual assignment view of federalis recommends central government policies for example resident based taxation or grants in aid to correct these failures these recommendations assume that the central government will act as a benevolent social planner the political economy view of federalism suggests that this assumption is in error and that additional federalist institutions must be considered alternative legislative structures and constitutional rules are considered

household migration and the local public sector evidence from sweden 1981 1984 westerlund o and wyzan m l 1995 household migration and the local public sector evidence from sweden 1981 1984 reg studies 29 145 157 in this paper the relationship between public sector attributes and household characteristics and swedish household migration 1981 4 is studied we report results separately for metropolitan and non metropolitan areas because the per capita levels of the tax base and intergovernmental grants are theoretically important migration determinants where population is sparse whilst the tax rate may be more important where population is dense because fiscal influences are likely to be stronger for short distance migration we apply multinomial logit to a three way choice set staying and migrating short and long distances empirical results support our fiscal hypotheses and are consistent with previous findings on household characteristics westerlund o et wyzan m l 1995 la migration des menages et le secteur public local des preuves provenant de la suede de

pesticides productivity and farmer health a philippine case study health is recognized as one of the most important components of the human capital of rural people in developing countries there is a growing body of literature showing the productivity effects of health associated with nutrition e g bliss and stern 1978 strauss 1986 deolalikar 1988 pitt rosenzweig and hassan 1990 in this literature the productivity effects of health are inferred either by correlating health indicators with wages or by including health indicators in an agricultural production function the human capital literature also has demonstrated that farmer education plays an important role in the allocative and technical efficiency of farmers welch 1970 schultz 1975

identification of endogenous social effects the reflection problem this paper examines the reflection problem that arises when a researcher observing the distribution of behaviour in a population tries to infer whether the average behaviour in some group influences the behaviour of the individuals that comprise the group it is found that inference is not possible unless the researcher has prior information specifying the compisition of reference groups if this information is available the prospects for inference depend critically on the population relationship between the variables defining reference groups and those directly affecting outcomes inference is difficult to implossible if these variables are functionally dependent or are statistically independent the prospects are better if the variables defining reference groups and those directly affecting outcomes are moderately related in the population

fiscal capacity tax effort and optimal equalization grants in this paper we address the question how should the tax burden in a feder ation be distributed across the different jurisdictions so that the social cost of providing government services is minimized using optimal tax theory we derive formulas for the optimal equalization grants that equalize the social marginal cost of raising revenue across all provinces we show how the optimal equalization grants are related to a measure of tax effort based on the marginal cost of public funds and a measure of fiscal capacity that takes into account the elasticity of the tax base and its substitutability with other tax bases

attachment to home and efficient purchases of population in a fiscal externality economy abstract this paper examines the efficiency properties of an economy characterized by strategically competing regions and individuals with varying degrees of attachment to home in an otherwise standard fiscal externality setting regional authorities may make interregional transfers in purchasing preferred populations however there is a range of distributions of resources over which neither region makes transfers nevertheless all equilibrium allocations resulting from the nash behavior of regional authorities including those that involve no transfers are efficient therefore in contrast to the standard conclusions of the fiscal externality literature there is no efficiency role for a central authority

interactions in local governments spending decisions evidence from portugal costa h goncalves veiga l and portela m interactions in local governments spending decisions evidence from portugal regional studies this paper aims to analyse the degree of interaction between portuguese municipalities expenditure levels by estimating a dynamic panel model based on jurisdictional reaction functions the analysis is performed for all 278 portuguese mainland municipalities from 1986 to 2006 using alternative ways to measure neighbourhood results indicate that local governments spending decisions are significantly and positively influenced by the actions of neighbouring municipalities attempts to identify the sources of interaction allow it to be concluded that they are due to spillovers that require coordination in expenditure items and to mimicking behaviour possibly to attract households and firms

tax competition in a fiscal union with decentralized leadership this paper examines capital tax competition in the presence of an interstate transfer policy without federal commitment lack of commitment implies that local tax policy is chosen prior to federal transfers the paper s main result is that ex post federal policy neutralizes horizontal fiscal externalities insulating tax policy from capital mobility federal policy however introduces a new source of inefficiency unrelated to tax competition specifically ex post transfer payments prove to be equivalent to an interstate revenue sharing system which may render federal intervention in the presence of fiscal externalities welfare deteriorating relative to tax competition

keeping up with the portuguese joneses a study on the spatial dependence of municipal expenditure abstractmunicipalities tend to replicate the size and the composition of their neighbours expenditures independently of being ruled by left wing or right wing parties this is one important concl

a dynamic equalisation model for economic and social capital grants with a south african example abstract a capital grant model has been developed which can be used in developing economies to allocate grants to sub national governments for economic or social capital the model allows these allocations to happen in a way that increases the value of the capital stock whilst at the same time addresses any inter regional inequities or economic inefficiencies the model is also applied to south africa as an illustrative example and the results of three model simulations for that country are presented there is a discussion of the data requirements for the model and how it might be replicated by researchers for other economies

a simple dynamic decentralized leadership model with private savings and local borrowing regulation abstract this paper considers a simple dynamic decentralized leadership model with local borrowing and regional productivity enhancing investment in this model the central government is benevolent but cannot commit to ex post intergovernmental transfer policies while local governments act strategically after accounting for the ex post motives of the central government we then investigate inefficiency in the subgame perfect equilibrium we analyze the effect of central control on local borrowing and show that central control is of no benefit because ex ante local taxation works to offset it we find the model yields different policy implications that central control is effective when extended to the case of residential mobility

debt bailouts and constitutions a demand based theory of sub national debt bailouts is presented it is shown that revenue sharing rs arrangements alter the demand for bailouts among politicians with regional constituencies as a bailout usually implies a shift of taxation to the federal tier automatic rs may lead to the formation of pro bailout coalitions formed by indebted states and states that are net recipients of the rs arrangement also rs can act as a commitment device for compensating payments among state representatives making a bailout politically rational the model shows that the state debt bailouts approved by the brazilian senate prior to the enactment of the fiscal responsibility act were fully consistent with politicians that maximize the proceeds accruing to their constituencies

second generation fiscal federalism the implications of fiscal incentives abstract first generation fiscal federalism fgff studies the performance of decentralized systems under the assumption of benevolent social planners second generation fiscal federalism sgff studies performance based on the fiscal and political incentives facing subnational officials the paper focuses on three aspects of sgff first it considers the design of intergovernmental transfers while fgff emphasizes correcting vertical and horizontal equity sgff emphasizes the importance of fiscal incentives for producing local economic prosperity sgff extends fgff approaches by showing how non linear transfer systems can produce both equalization and high marginal fiscal incentives to produce local economic growth second the paper raises the fiscal incentive approach showing how different tax systems produce different fiscal incentives for political officials to choose policies third the paper discusses the interaction of democracy and fiscal federalism

the welfare effects of intergovernmental grants in an economy with distortionary local taxes a simple general equilibrium analysis this paper examines the welfare impact of intergovernmental transfers when recipient governments use distortionary taxes both lump sum and matching grants are investigated a distortionary factor depending on local demand and supply elasticities and the local tax rate on the taxed commodity determines the real income change to a jurisdiction per dollar transferred matching grants are dominated by lump sum grants when these can be set optimally for each recipient if grant policy must be uniform positive or negative matching rates are desired if equity adjusted distortionary factors are positively negatively correlated with local public service levels

further evidence on pesticides productivity and farmer health potato production in ecuador a recent paper by antle and pingali 1994 showed that farmers health had a significant impact on the productivity of philippine rice farms and that pesticide use in rice production had a significant impact on farmers health a simulation analysis showed that restricting the use of insecticides that posed the greatest health risk was a win win policy as it would increase both the health and productivity or philippine rice farmers two features of philippine rice production that could affect the outcome of that analysis are first the low productivity of insecticides in rice production and second the humid tropical rice paddy environment where farmers use of protective clothing is minimal the antle and pingali study left open the question of whether this win win result would hold in a situation where the marginal productivity of insecticides or other pesticides is higher and where the climate is more

equilibria in second price auctions with participation costs abstract we investigate equilibria of sealed bid second price auctions with bidder participation costs in the independent private values environment we focus on equilibria in cutoff strategies participate and bid the valuation iff it is greater than the cutoff since if a bidder finds it optimal to participate she cannot do better than bidding her valuation when bidders are symmetric concavity strict convexity of the cumulative distribution function from which the valuations are drawn is a sufficient condition for uniqueness multiplicity within this class we also study a special case with asymmetric bidders and show that concavity convexity plays a similar role

the economics of fiscal decentralization there is no complete overview or discussion of the literature of the economics of federalism and fiscal decentralization even though scholarly interest in the topic has been increasing significantly over recent years this paper provides a general brief but comprehensive overview of the main insights from the literature on fiscal federalism and decentralization in doing so literature on fiscal federalism and decentralization is grouped into two main approaches first generation approach and an emerging second generation approach the discussion generally covers the two notions of fiscal decentralization fiscal autonomy and fiscal importance of subnational governments as the background of the most recently developed index of fiscal decentralization in vo the relevance of this discussion to any further development of a fiscal decentralization index is briefly noted

interregional interactions and population mobility the institutional level at which policies should be determined is an important issue that has been extensively treated in the economics literature in particular the literature has discussed to what extent decentralization of policy decisions give an inefficient outcome with a homogeneous population and perfect population mobility as it conventionally is modeled the following result is derived for a very general class of economies with interregional interactions a socially efficient outcome is a nash equilibrium of the game of decentralized and uncoordinated policy setting however if decisions about migration take a longer time to make than decisions of policy changes the general result above no longer holds with this decision sequence decentralization may give an inefficient outcome also in situations where the decentralized outcome is efficient in the absence of population mobility

identification of spatial durbin panel models identi cation of a spatial durbin model is a concern in the spatial econometrics literature the concern is similar to the identi cation of the endogenous eect the contextual eect and correlation eect in social interactions and networks this paper considers identi cation of spatial durbin dynamic panel models under 2sls and ml estimations we show that the parameters are generally identi ed via 2sls moment relations or expected log likelihood or quasi likelihood functions although identi cation might fail under some particular situations with the 2sls moments parameters can be generally identi ed via the quasi likelihood function of a model with intuitively appealing identi cation conditions monte carlo experiments suggest that omitting relevant durbin terms can result in signi cant biases in regression estimates while including an irrelevant durbin term causes no obvious loss of e ciency empirical illustration of the international spillover of economic growth through bilateral trade shows that inclusion of durbin terms can be important

interregional redistribution and mobility in federations a positive approach the paper studies the effects and the determinants of interregional redistribution in a model of residential and political choice we find that paradoxical consequences of inter jurisdictional transfers arise if people are mobile while self sufficient regions are nec essarily identical with respect to policies and average incomes in our model interregional redistribution always leads to the divergence of regional policies and per capita incomes thus interregional redistribution prevents interregional equality at the same time however transfers may allow for more interpersonal equality among the inhabitants of each region the voting population may therefore in a decision over the fiscal constitution deliberately implement such a transfer scheme to foster regional divergence empirical evidence from panel data from oecd countries and candian provinces is consistent with the theory

public expenditures and the unemployment rate in the american states panel evidence we reexamine the unemployment rate ur government expenditure nexus in a panel of 50 state and local governments slgs over the period 1977 2006 to provide new pre recession empirical evidence that helps put the expectations on the effects of the federal relief to slgs in a broader context we found that 1 per capita real public spending total and capital assistance and subsidies wages and salaries and social insurance categories was part of a cointegrating relationship with ur and real per capita state personal income 2 with the exception of social insurance other spending variables when statistically significant actually had a depressing effect on ur the magnitude of this effect however was generally small ur was most sensitive to increases in wages and salaries 3 long term causality analysis based on panel error correction coefficients provided consistent evidence of a causal effect from spending to ur but less consistent evidence of such effect in the opposite direction soci