Grazzini, Lisa; Petretto, Alessandro - In: FinanzArchiv: Public Finance Analysis 68 (2012) 3, pp. 303-330
We analyze how vertical or horizontal fiscal equalization affects the overprovision of local public goods due to vertical fiscal externality, when there is tax evasion. The overspending incentive of regional governments is examined in the cases of fiscal equalization based on pretax earned...