The paper asks whether subsidies aiming to redistribute economic activity across regions can be justified with the welfare argument. Moreover, different tax systems are compared with respect to the size of the subsidy needed for achieving a certain spatial distribution of economic activity, and...

The interaction of inequality and growth and the direction of causality in this relationship have been an extensively discussed topic with several questions but without clear answers both in the theoretical and empirical literature. The current paper contributes mainly into the new economic...