The provision of public services through national legislatures gives legislators the chance to fund locally-beneficial public projects using a shared national tax base. Nationally-financed, local public goods will be purchased at a subsidized price below marginal cost and may be inefficiently...

South Africa's transition from apartheid to democracy has been successful because its federal governance has provided protection for the economic elite from maximal redistributive taxation. Federal governance creates a "hostage game" in which the majority central government controls tax rates,...

The American Recovery and Reinvestment Act (ARRA) was the US government's fiscal response to the Great Recession. An important component of ARRA's $796 billion proposed budget was $318 billion in fiscal assistance to state and local governments. We examine the historical experience of federal...

Using a sample of the 48 mainland U.S. states for the period 1973-2009, we study the ability of U.S. states to expand own state employment through the use of state deficit policies. The analysis allows for the facts that U.S. states are part of a wider monetary and economic union with free...