Fiscal competition in a transition economy

Laura Solanko

No 4/2001, BOFIT Discussion Papers from Bank of Finland Institute for Emerging Economies (BOFIT)

Abstract: The paper analyses fiscal competition for mobile capital between identical regions in a transition country.A framework similar to Keen-Marchand (1997) is used to analyse welfare effects of regional competition.It is shown that in very early transition when the share of the old sector is overwhelming, consumers in a transition economy may be better off in a competitive equilibrium.The decision-makers, however, would prefer to coordinate their fiscal policies.

Date: 2001
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Working Paper: Fiscal competition in a transition economy (2002)
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