Fiscal Equalization and Capitalization: Evidence from a Policy Reform

Wouter Vermeulen and Maarten Allers

No 245, CPB Discussion Paper from CPB Netherlands Bureau for Economic Policy Analysis

Abstract: Fiscal equalization through the allocation of central government grants may have adverse distributional implications if these grants capitalize into house values. We investigate the impact of changes in grants induced by a reform of the Dutch grant system. Since this reform was implemented gradually and in two subsequent stages that targeted different policy domains, we are able to identify on the nonlinearity of its impact over time. As robustness checks, we identify on either stage separately, or on a reform of financing school buildings, which should have limited effects on house prices as additional funds came with an additional task for municipalities. Our results indicate full capitalization of grants. It follows that property owners were important beneficiaries in the municipalities that saw their grants increased because of disadvantageous socio-economic composition.

JEL-codes: H7 H81 R2 R3 R51 (search for similar items in EconPapers)
Date: 2013-05
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://www.cpb.nl/sites/default/files/publicaties ... d-capitalization.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpb:discus:245

Access Statistics for this paper

More papers in CPB Discussion Paper from CPB Netherlands Bureau for Economic Policy Analysis Contact information at EDIRC.
Bibliographic data for series maintained by ().