Paper #1226

Títol:

Tobin meets Oates: Solidarity and the optimal fiscal federal structure

Autors:

Xavier Calsamiglia, Teresa Garcia-Milà i Therese J. McGuire

Data:

Juliol 2010

Resum:

We explore the implications for the optimal degree of fiscal decentralization when people’s preferences for goods and services, which classic treatments of fiscal federalism (Oates, 1972) place in the purview of local governments, exhibit specific egalitarianism (Tobin, 1970), or solidarity. We find that a system in which the central government provides a common minimum level of the publicly provided good, and local governments are allowed to use their own resources to provide an even higher local level, performs better from an efficiency perspective relative to all other systems analyzed for a relevant range of preferences over solidarity.

Paraules clau:

fiscal decentralization, specific egalitarianism, solidarity, externalities.

Codis JEL:

H42, H77.

Àrea de Recerca:

Macroeconomia i Economia Internacional

Publicat a:

International Tax and Public Finance, Vol. 20, Issue 3, 2013, pp. 450-473

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