A large panel of German municipalities is employed in order to investigate the dynamic fiscal policy adjustment of local jurisdictions using a VEC model which explicitly takes account of the intertemporal budget constraint. The results confirm that a substantial part of adjustment takes place by...

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...

A multi-jurisdictional system is thought to improve, through yardstick competition, accountability. At the same time equalization programs, a common feature of multijurisdictional systems, are thought to be a prerequisite for both efficiency of the internal market and the equity objective of the...

A central question in the study of democratic polities is the extent to which elite opinion about public policy shapes and potentially manipulates public opinion on those issues. Existing empirical estimates of the effect of elite communication on individual opinion formation are, however,...

The existence of either "horizontal" fiscal externalities, in which changes in one jurisdiction's policies affect the government budget of other jurisdictions and therefore the utility of its residents or "vertical" externalities, in which changes in one level of government's policies affect the...

The European Court of Justice (ECJ) is commonly described as a powerful international force for legal integration. Indeed, past studies indicate that the ECJ has developed a supranational legal order that trumps national law in a broad range of economic policy areas. But this depiction of an...

We examine the impact of state taxation on employment by focusing on county employment in metropolitan statistical areas (MSA). However, we make a distinction between the impacts of state taxation on employment in metropolitan areas that are wholly contained within a single state and...

International integration of markets for labor and capital has far-reaching policy implications in economies where governments pursue extensive programs of redistribution through tax and transfer policies. The large fiscal impacts that result from movement of high- and low-income populations, as...

This paper studies the relationship between fiscal decentralization and electoral accountability, by analyzing how decentralization impacts upon incentive and selection effects, and thus on voter welfare. The effect of fiscal centralization on voter welfare works through two channels: (i) via...

The dynamic fiscal policy adjustment of local jurisdictions is investigated empirically using a panel of more than 1000 U.S. municipalities over a quarter of a century. Distinguishing own-source revenue, grants, expenditures, and debt service, the analysis is carried out using a vector...