A simple theory suggests that a common form of federal horizontal equalization grants should cause subnational governments to levy higher tax rates, distorting local tax bases and so increasing federal transfers. To test this, I examine Canadian provincial tax policies in the 1972-2002 period....

We test the hypothesis that the flypaper effect can arise if the recipient government finances part of its expenditures with a distortionary tax. We present a simple theoretical framework that shows how a lump-sum transfer stimulates the marginal expenditures of a recipient government through an...

This paper provides a characterization of the fiscal policy framework in four established federal countries with heterogeneous intergovernmental relations and demographic characteristics: Canada, Germany, Switzerland and the United States. We consider the implications of fiscal federalism from...

A reasonable and fair interpretation of the mandate for equalization payments in Section 36(2) of the Canadian Constitution differs from the present equalization formula in these respects: Transfers to the poorer provinces would be financed by transfers from the richer provinces rather than from...

Die aktuelle Diskussion über eine Reform des deutschen Bundesstaates hat Regelungen des Grundgesetzes zum Gegenstand, die erst nach Gründung der Bundesrepublik eingeführt wurden. Dies gilt für den Länderfinanzausgleich und die vertikale Einnahmenverteilung, aber auch für die...

Die Ukraine ist ein Land mit großen regionalen Unterschieden. Eine Analyse der Finanzströme zwischen der zentralstaatlichen und der regionalen Ebene für die Jahre 1996 bis 1999 zeigt, dass Einkommen von relativ reichen zu relativ armen Regionen umverteilt und hierbei die regionale...

This paper studies the provision of public inputs in a federal system. A vertical tax externality is also considered in a simple general equilibrium model used to analyze the efficiency of equilibria under different scenarios. The results show that the state provision of public inputs may affect...