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A structural approach for analyzing fiscal equalization

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  • Audun Langørgen

Abstract

Many countries apply cost equalization and/or fiscal capacity equalization formulas to enable subnational governments to provide comparable service standards at comparable tax rates. This paper demonstrates how measures of expenditure needs and fiscal capacity can be derived from a structural model of local government spending and taxing behavior. The structural parameters are shown to provide the information required to implement equalization defined as a balance between the principles of horizontal equity and local autonomy. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Audun Langørgen, 2015. "A structural approach for analyzing fiscal equalization," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(3), pages 376-400, June.
    • Handle: RePEc:kap:itaxpf:v:22:y:2015:i:3:p:376-400
    DOI: 10.1007/s10797-014-9317-0
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    Cited by:

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    2. Héctor Cardozo, 2021. "An estimation of expenditure needs for Argentinian provinces: A structural modeling approach," Ensayos de Política Económica, Departamento de Investigación Francisco Valsecchi, Facultad de Ciencias Económicas, Pontificia Universidad Católica Argentina., vol. 3(3), pages 41-75, Octubre.
    3. Li, Bin & Li, Tuo & Yu, Man & Chen, Bin, 2017. "Can equalization of public services narrow the regional disparities in China? A spatial econometrics approach," China Economic Review, Elsevier, vol. 44(C), pages 67-78.

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    More about this item

    Keywords

    Fiscal equalization; Horizontal equity; Local autonomy; Expenditure needs; Fiscal capacity; Structural modeling; H71; H72;
    All these keywords.

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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