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Local Spending, Transfers and Costly Tax Collection

Fernando Aragon ()

Discussion Papers from Department of Economics, Simon Fraser University

Abstract: This paper studies the effect of costly taxation on the fiscal response of local governments to intergovernmental transfers. Using a panel dataset of Peruvian municipalities, I find robust evidence that central government's grants have a greater stimulatory effect in municipalities facing higher tax collection costs. The results are consistent with costly taxation partially explaining the flypaper effect.

Keywords: Flypaper effect; Intergovernmental transfers; Fiscal decentralization (search for similar items in EconPapers)
JEL-codes: H71 H77 (search for similar items in EconPapers)
Pages: 37
Date: 2012-05
New Economics Papers: this item is included in nep-acc, nep-geo, nep-mac, nep-pbe, nep-pub and nep-ure
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Local Spending, Transfers, and Costly Tax Collection (2013) Downloads
Working Paper: The Flypaper Effect Revisited (2009) Downloads
Working Paper: The flypaper effect revisited (2009) Downloads
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