This paper investigates the efficiency argument for a vertical fiscal gap in a federation using a simple model of a central government and several identical states. Each level provides a public good to residents within its jurisdiction and finances it by taxing labour income and rents. If labour...

Gaming represents a relatively easy source of taxation revenue. As a result gambling is taxed more highly than most other service or entertainment activities because the demand for wagering is relatively insensitive to its price and the excess burden of such taxes on recreational gamblers may...

This paper presents the first hedonic general-equilibrium estimates of quality-of-life and firm productivity differences across Canadian cities, using data on local wages and housing costs. These estimates account for the unobservability of land rents and geographic differences in federal and...

We report on the nature of a utility optimizing transfer from one regional government to another when local public goods are present. Computer examples reveal that small differences in regional endowments result in large differences in equilibrium outcomes for two regions, under optimal...

This paper presents a selective and non-technical survey of the role of intergovernmental equalization transfers as a device for achieving efficiency in the allocation of labor across regions in a decentralized nation, and for achieving fiscal equity among residents of various regions. We...

This paper examines how sequential decision-making by two levels of government can result in vertical fiscal imbalances (VFI). Federal-regional transfers serve to equalize the marginal cost of public funds between regions hit by different shocks. The optimal vertical fiscal gap minimizes the...

A reasonable and fair interpretation of the mandate for equalization payments in Section 36(2) of the Canadian Constitution differs from the present equalization formula in these respects: Transfers to the poorer provinces would be financed by transfers from the richer provinces rather than from...

The 1986 tax reform in Bolivia was comprehensive and highly successful. Since that time the economy has moved from a state of hyperinflation to one of economic stability and growth. As this process continues there will be a need for additional government revenues to develop social and physical...