Fiscal federalism with a single instrument to finance government

Carlos Maravall Rodriguez ()

UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía

Abstract: The structure of each level of government in the United States has changed over the last 200 years. Wallis (2000) has presented empirical evidence that relates the dominance of each level not to the functions government decides to undertake (the expenditures it commits to), but to the costs and benefits of the financial instruments each level has available (the way each level extracts revenues). In this paper we provide theoretical evidence for this hypothesis. We show why two different levels of government (e.g. state and federal) would not want to use a common instrument to finance the same good.

Date: 2005-04
New Economics Papers: this item is included in nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:cte:werepe:we052213

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