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TAX FEDERALISM AND COOPERATIVE GAMES: STABILITY ANALYSIS

Emilio Calvo ()

No 118, Discussion Papers in Economic Behaviour from University of Valencia, ERI-CES

Abstract: This paper is devoted to analyzing the problem of how to distribute the public spending among the different regions of a country once all taxes are collected. We model the problem as a cooperative game in coalitional form. For that purpose, we need to specify how much tax is collected in every region (and coalition of regions) in the country under secession. In this way, we obtain the tax game of the problem, and its core is given by the set of stable tax allocations. Following such an approach, we are able to analyze the stability of a tax financing system. The Spanish case is considered and we show that the present regional financial system is unstable from this perspective.

Keywords: fiscal federalism; fiscal stability; secessionism; coalitional games (search for similar items in EconPapers)
JEL-codes: H72 H77 C71 (search for similar items in EconPapers)
Date: 2018-04
New Economics Papers: this item is included in nep-gth
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Persistent link: https://EconPapers.repec.org/RePEc:dbe:wpaper:0118

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