Marginal rates of contribution (MRC), i.e., the rates at which additional revenues are skimmed via larger contributions or lower transfer receipts, quantify the incentives of a fiscal equalization scheme. The present paper is the first to calculate marginal rates of contribution for the Laender...

The transfer elasticity of income tax rates is an important parameter in public finance. Given the significant fiscal autonomy of Swiss municipalities, Switzerland is an ideal setting for examining behavioral responses to tax policy. Using a regression kink design, we find robust causal evidence...

We examine whether US and German state governments pursue sustainable fiscal policies taking into account fiscal transfers. Using panel data techniques we investigate whether the debt-to-GDP ratio had a positive influence on the primary surplus (Bohn-model). We show that including/excluding...

This paper studies comprehensive national panel data of local option sales taxes at the monthly frequency. I calculate state-by-month population weighted averages of local sales tax rates. I document ten stylized facts concerning the time series patterns and spatial dynamics of local sales...

In the wake of the euro area crisis, the debate on instruments to deepen economic integration among its members has intensified, among others putting forward a fiscal stabilization capacity for EMU members. Contributions made so far to further this idea have mostly concentrated on the...

Most of the EU budget is spent on redistribution. Large sums of money are transferred from the member state governments to Brussels and back to these governments. Some member states end up as net receivers and some as net payers. Most economists agree that the resources of the budget should be...

Should a subset of member states of a federation be allowed to form a sub-union on some policy issue? When centralization is not politically feasible, allowing an enhanced cooperation agreement among a subset of countries permits the latter to gain benefits which would otherwise be lost....

This paper challenges the view that tax base equalization by the so-called Representative Tax System (RTS) removes inefficient undertaxation in corporate tax competition. The innovation of the paper is that it focuses on a tax on corporate income, instead of the unit tax on capital considered in...

The paper derives a normative model for partial fiscal equalisation based on a number of axioms and allows for the existence of a specific fiscal need in the jurisdictions. The theoretical model is then empirically tested for the case of the European Union using data from 1986-97. It is found...

It is widely debated whether a monetary union has to be accompanied by a fiscal transfer scheme to accommodate asymmetric shocks. We build a model of a monetary union with a central bank and two heterogeneous countries that are linked by a fiscal transfer scheme with repercussions on monetary...