Schweizer (2017) provides a powerful and general way of using compensation payments to induce efficient actions. Its application to takings under fiscal illusion, however, is problematic. A better model would assume that the government decides to take property by considering effects on the...

The traditional theory for fiscal federalism assumes that the lower tier is more efficient in producing local public goods because of information asymmetry, while on the finance side Central Government might be more efficient in raising resources that will then be distributed through...