Footloose capital and productive public services

Pasquale Commendatore (), Ingrid Kubin () and Carmelo Petraglia ()

Department of Economics Working Papers from Vienna University of Economics and B.A., Department of Economics

Abstract: We analyse in a Footloose Capital productive public services provided by a central government aiming at reducing regional disparities. Two countervailing effects occur – one upon productivity and another upon local demand – the relative strength of which depends upon the financing scheme. Only if the “rich” region contributes sufficiently to the financing of the public services in the “poor” region, the poor region will actually gain. In studying these questions we pay particular attention to the dynamic adjustment processes and to the role of trade freeness.

JEL-codes: H4 R1 R12 F12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-geo and nep-pbe
Date: 2007-10
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