A structural approach for analyzing fiscal equalization

Audun Langørgen

International Tax and Public Finance, 2015, vol. 22, issue 3, 376-400

Abstract: Many countries apply cost equalization and/or fiscal capacity equalization formulas to enable subnational governments to provide comparable service standards at comparable tax rates. This paper demonstrates how measures of expenditure needs and fiscal capacity can be derived from a structural model of local government spending and taxing behavior. The structural parameters are shown to provide the information required to implement equalization defined as a balance between the principles of horizontal equity and local autonomy. Copyright Springer Science+Business Media New York 2015

Keywords: Fiscal equalization; Horizontal equity; Local autonomy; Expenditure needs; Fiscal capacity; Structural modeling; H71; H72 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:kap:itaxpf:v:22:y:2015:i:3:p:376-400

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DOI: 10.1007/s10797-014-9317-0

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