Personal Redistribution and the Regional Allocation of Public Investment
Ramon Caminal ()
No 5, Working Papers from Barcelona Graduate School of Economics
How should an equity-motivated policy-maker allocate public capital (infrastructure) across regions. Should it aim at reducing interregional differences in per capita output, or at maximizing total output? Such a normative question is examined in a model where the policy-maker is exclusively concerned about personal inequality and has access to two policy instruments: (i) a personal tax-transfer system (taxation is distortionary), and (ii) the regional allocation of public investment. I show that the case for public investment as a significant instrument for interpersonal redistribution is rather weak. In the most favorable case, when the tax code is constrained to be uniform across regions, it is optimal to distort the allocation of public investment in favor of the poor regions, but only to a limited extent. If the tax code can vary across regions then the optimal policy may involve an allocation of public investment distorted in favor of the rich regions.
Keywords: Public investments; regional policy; redistribution (search for similar items in EconPapers)
JEL-codes: D31 H41 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Journal Article: Personal redistribution and the regional allocation of public investment (2004)
Working Paper: Personal redistribution and the regional allocation of public investment (2002)
Working Paper: Personal Redistribution and the Regional Allocation of Public Investment (2000)
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:bge:wpaper:5
Access Statistics for this paper
More papers in Working Papers from Barcelona Graduate School of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Bruno Guallar ().