Poverty traps with Local Allocation Tax grants in Japan

Takero Doi

No 2010-002, Keio/Kyoto Joint Global COE Discussion Paper Series from Keio/Kyoto Joint Global COE Program

Abstract: This paper investigates poverty traps with the Local Allocation Tax (LAT) grants in Japan. The LAT grants, which distributed to local governments by the central government, may be hesitated to make efforts for enhancing regional economic growth, due to the calculation of the LAT grants. We show that the LAT grants give a disincentive to increase their estimated tax revenue and lower regional income by a simple dynamic model. Based on implication of our model, the panel Granger (non-)causality tests are implemented. We find that there are poverty traps due to the LAT grants in Japan.

Pages: 28 pages
Date: 2010
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Citations: View citations in EconPapers (5)

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Journal Article: POVERTY TRAPS WITH LOCAL ALLOCATION TAX GRANTS IN JAPAN (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:kei:dpaper:2010-002

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