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Resource Rents, Cost Differences and Fiscal Equalization

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  • Petchey, Jeffrey

Abstract

It has been argued that the fiscal equalization process in Australia, which transfers wealth between states, has efficiency costs. Here, the author shows that equalization transfers can be efficiency enhancing. Further, it is shown that, under certain assumptions about interstate differences in costs of production and resource endowments, such transfers may need to favor relatively high cost and resource rich states, such as Western Australia and Queensland, while, under other assumptions about diversity, they should favor relatively resource poor and low cost states, such as Victoria and New South Wales. Copyright 1995 by The Economic Society of Australia.

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Bibliographic Info

Article provided by The Economic Society of Australia in its journal The Economic Record.

Volume (Year): 71 (1995)
Issue (Month): 215 (December)
Pages: 343-53

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Handle: RePEc:bla:ecorec:v:71:y:1995:i:215:p:343-53

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Cited by:
  1. Anping Chen & Nicolaas Groenewold, 2011. "Regional Equality and National Development in China: Is There a Trade‐Off?," Growth and Change, Gatton College of Business and Economics, University of Kentucky, vol. 42(4), pages 628-669, December.
  2. Anping Chen & Nicolaas Groenewold, 2011. "The National and Regional Effects of Fiscal Decentralisation in China," Economics Discussion / Working Papers 11-18, The University of Western Australia, Department of Economics.
  3. Michael McLure, 2009. "Royalties for Regions: accountability and sustainability," Economics Discussion / Working Papers 09-05, The University of Western Australia, Department of Economics.
  4. Nicolaas Groenewold & Alfred Hagger, 2007. "Regional Unemployment Disparities: An Evaluation of Policy Measures," Economics Discussion / Working Papers 07-05, The University of Western Australia, Department of Economics.
  5. Anping Chen & Nicolaas Groenewold, 2012. "The Regional Economic Effects of a Reduction in Carbon Emissions and An Evaluation of Offsetting Policies in China," Economics Discussion / Working Papers 12-14, The University of Western Australia, Department of Economics.
  6. Fenge, Robert & Meier, Volker, 2002. "Why cities should not be subsidized," Munich Reprints in Economics 20356, University of Munich, Department of Economics.
  7. Anping Chen & Nicolaas Groenewold, 2013. "The national and regional effects of fiscal decentralisation in China," The Annals of Regional Science, Springer, vol. 51(3), pages 731-760, December.

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