We analyse voting on devolution of responsibilities for the provision of public goods to local governments in a federal country, with a bicameral national legislature. We suppose that devolution is a …scal reform which reduces federal public expenditure on a national public good, and...

We analyse horizontal and vertical fiscal externalities in a federal country with a bicameral national system. We show under which conditions, at equilibrium, the two chambers agree or disagree on the choice of a national tax rate.

We analyse how vertical or horizontal fiscal equalization affects the overprovision of local public goods due to vertical fiscal externality, when there is tax evasion. The regional governments overspending incentive is examined both in case of a fiscal equalization based on pretax earned income...