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Fiscal transfers in the spatial economy

Marcel Henkel, Tobias Seidel and Jens Südekum
Authors registered in the RePEc Author Service: Jens Suedekum ()

No 322, DICE Discussion Papers from University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)

Abstract: Many countries shift substantial public resources across jurisdictions to mitigate spatial economic disparities. We use a general equilibrium model with multiple asymmetric regions, labor mobility, and costly trade to carve out the aggregate implications of fiscal transfers. Calibrating the model for Germany, we find that transfers indeed deliver smaller disparities across regions. This comes at the cost of lower national output, however, because activity is diverted away from core cities and towards remote areas with low productivity. But despite this output loss, national welfare may still increase, because the transfer scheme countervails over-congestion in large cities.

Keywords: fiscal equalization; regional transfers; migration; spatial economics (search for similar items in EconPapers)
JEL-codes: F15 R12 R13 R23 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-eur, nep-geo and nep-ure
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Citations: View citations in EconPapers (3) Track citations by RSS feed

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https://www.econstor.eu/bitstream/10419/203133/1/1676278737.pdf (application/pdf)

Related works:
Working Paper: Fiscal Transfers in the Spatial Economy (2018) Downloads
Working Paper: Fiscal Transfers in the Spatial Economy (2018) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:dicedp:322

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