This paper analyzes the welfare implications of a transfer mechanism in a fiscally decentralized economy where local governments select their tax collection effort to maximize their lifetime utility. We consider a transfer rule that both punishes for the lack of efficiency in tax-collection and...

We investigate the welfare implications of endogenizing bank regulation and supervision quality in a dynamic general equilibrium framework. Bank regulation and supervision quality (alpha) affects households through deposit decision, firms through credit pay-back decision, and banks via a fee...