The Tragedy of the Commons or the Curse of Federalism
Laurent Bouton (),
Marjorie Gassner and
Public Economics from University Library of Munich, Germany
It has been suggested that …scal federalism is a good way to induce decentralized entities to behave parsimoniously, but this has been largely criticized in the literature, in particular because of the Common-Pool problem. In this paper, we present an extra facet of the latter problem. We present a simple theoretical model con…rmed by empirical evidence suggesting that vertical imbalance induces govenments to substitute redistributive spending for non-distributive expenditures. This drives …scal policies to be less efficient in reducing income inequality.
Keywords: Federalism; Income Inequality; Common Pool; Redistribution (search for similar items in EconPapers)
JEL-codes: D6 D7 H (search for similar items in EconPapers)
Pages: 29 pages
New Economics Papers: this item is included in nep-pbe
Note: Type of Document - pdf; pages: 29
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwppe:0511013
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