Horizontal versus vertical fiscal equalization: the assignment problem
Georg Anetsberger and
Volker Arnold ()
Additional contact information
Georg Anetsberger: University of Hagen
Volker Arnold: University of Hagen
International Tax and Public Finance, 2019, vol. 26, issue 2, 357-380
Abstract We analyze a model in which the central government can establish a vertical equalization scheme, whereas the regional governments can set up a horizontal equalization scheme. The two levels of government decide in different chronological order. It turns out that, regardless of the timing, the central government always prevails—horizontal equalization does not take place. However, the subgame-perfect equilibrium is only Pareto-efficient, if the central government acts as a Stackelberg leader. Moreover, if the goal of achieving equality in living conditions across the regions is pursued in the model economy, the only suitable candidate for reaching this goal is vertical equalization.
Keywords: Federations; Fiscal equalization; Labor mobility; Regional public goods (search for similar items in EconPapers)
JEL-codes: H23 H41 H77 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s10797-018-9499-y Abstract (text/html)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:kap:itaxpf:v:26:y:2019:i:2:d:10.1007_s10797-018-9499-y
Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/10797/PS2
Access Statistics for this article
International Tax and Public Finance is currently edited by Ronald B. Davies and Kimberly Scharf
More articles in International Tax and Public Finance from Springer, International Institute of Public Finance Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla ().