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In a monetary union, the interaction between several governments and a single central bank is plagued by several sources of deficit bias, including common pool problems. Each government has strong preferences over local spending and taxation but suffers only part of the costs of union-wide...
Persistent link: https://www.econbiz.de/10011434438
We extend the literature on local income tax competition by allowing for inter-jurisdictional spillovers and imperfect rivalry in consumption of a publicly provided good. Comparing decentralized second-best results of a theoretical model with an efficient benchmark, we identify three...
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. We show the potential existence of a poverty trap as a result of decentralization in taxation decisions. …
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these laws, and (3) the degree of decentralization of jurisdictions with respect to local public goods. It is suggested that … decentralization, with adverse consequences for economic efficiency. The paper concludes with a brief normative discussion of …
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paper compares three regimes (centralization, decentralization and federalism) in an economy where individuals choose their … move from decentralization to federalism, called moral federalism, is welfare improving behind the veil of ignorance if and … only if centralization dominates decentralization, and (ii) for the group that favors a restrictive policy moral federalism …
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