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Capital Equalization and the Australian States

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  • Petchey, Jeffrey, et al

Abstract

The Australian Grants Commission has recently considered ways to take account of differences in capital costs across States within the existing fiscal equalization formula. Here we develop a theoretical methodology for estimating differences in the costs of capital faced by the States in the General Government Sector. This methodology is used to generate preliminary estimates of State capital cost `disabilities' from 1962-63 to 1995-96. Finally, we suggest how the methodology and the estimates of capital cost disabilities might be integrated into the Commission's formula to produce a grant distribution which reflects different costs of capital across States. Copyright 2000 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): 76 (2000)
Issue (Month): 232 (March)
Pages: 32-44

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Handle: RePEc:bla:ecorec:v:76:y:2000:i:232:p:32-44

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Cited by:
  1. Mikhailitchenko, S. & Gfyen, D.T. & Smith, C., 2005. "Estimates of Capital Stocks for the States and Territories of Australia," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 35(1-2), pages 1-22, March/Sep.
  2. Castells, Antoni & Sole-Olle, Albert, 2005. "The regional allocation of infrastructure investment: The role of equity, efficiency and political factors," European Economic Review, Elsevier, vol. 49(5), pages 1165-1205, July.

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