Rapid spending growth has made Medicaid a major element in state budgets; financial support from Federal matching grants is now a main component of state government revenues and of intergovernmental fiscal relations. We discuss recent, ongoing, and prospective reforms of intergovernmental...

The rich countries of the world, especially those of Western Europe, are aging rapidly due to fertility rates far below the replacement rate, while experiencing substantial immigration from elsewhere in Europe, North Africa, and the third world generally. For the foreseeable future, West...

This paper examines the implications of Federal statutory restrictions on state government taxing powers. Such pre-emption can prevent states from pursuing policies that are best adapted to their economic circumstances and objectives, inefficiently constraining decentralized state tax...

The devastation resulting from the hurricanes of 2005 could largely have been avoided at modest cost, evidence of a policy failure that may stem from misaligned incentives among levels of government. In particular, Federal government provision of ex post disaster relief means that subnational...

A review of recent fiscal history can help to understand the mechanisms by which subnational governments adapt their tax, expenditure, and debt policies to an ever-changing economic environment, and on the role of fiscal assistance from higher-level governments in this process. In principle,...

In this paper, we analyze a class of models in which there are interjurisdictional spillovers among heterogeneous jurisdictions, as illustrated for instance by CO2 emissions that affect the global environment. Each jurisdiction’s emissions depend upon the local stock of private capital....

This is a time of increased interest in local government finance in Kentucky, as evidenced by the creation of a Task Force on Local Taxation, established by the General Assembly. The final report of the Task Force offers significant recommendations, including an amendment of the state...

Acting in the interest of their residents, within limits imposed by Federal statute and by the Constitution, states have incentives to impose taxes on the profits of corporations owned by nonresidents. This paper presents a model within which a state, using an apportionment formula that includes...

The theory of fiscal competition seeks to ascertain how fiscal policymaking is affected by competitive pressures faced by governments. This requires a theory of policy choice, and, as such, the theory of fiscal competition lies squarely in the realm of political economy. This essay presents a...

Extreme events like hurricanes, earthquakes, or terrorist attacks present major challenges for fiscal systems at all levels of government. Analysts concerned with the fiscal and financial impacts of disasters must attempt to assess the likelihood of rare events of large magnitude such as...