Spillover Effects in a Federal Country with Vertical Tax Externalities

Lisa Grazzini and Alessandro Petretto ()

Public Finance Review, 2017, vol. 45, issue 5, 701-720

Abstract: We analyze how spillover effects may affect the choice of a federal tax rate in a federal country with vertical tax externalities. Our main result shows the conditions under which the federal tax rate with spillover effects is lower or higher than the federal tax rate without spillover effects. The effects of vertical tax externalities can be modified by the reaction of the federal government to the horizontal externality due to spillover effects.

Keywords: fiscal federalism; median voter; positive spillovers (search for similar items in EconPapers)
Date: 2017
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http://pfr.sagepub.com/content/45/5/701.abstract (text/html)

Related works:
Working Paper: Spillover Effects in a Federal Country with Vertical Tax Externalities (2015)
Working Paper: Spillover Effects in a Federal Country with Vertical Tax Externalities (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:45:y:2017:i:5:p:701-720

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