Is Vertical Fiscal Imbalance so Inefficient? or: The Flypaper Effect is Not an Anomaly

Geoffrey Brennan and J.J. Pincus

Working Papers from University of Adelaide - Department of Economics

Abstract: This paper re-examines criticisms made of vertical fiscal imbalance in Australian and other federations. We argue that one of the central criticisms made of vertical fiscal imbalance is unproven. Vertical fiscal imbalance occurs when the central government collects more taxes than it spends on its own purposes; when that states collect less in tax than they spend; and the differences represent grants from the central government to the states (and local governments).

Keywords: AUSTRALIA; PUBLIC FINANCE (search for similar items in EconPapers)
JEL-codes: H71 H72 (search for similar items in EconPapers)
Date: 1998
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Persistent link: http://EconPapers.repec.org/RePEc:fth:adelai:98-06

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