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Need Equalization Transfers and Productive Efficiency of Local Governments

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  • Alessandro Petretto

Abstract

The paper deals with Need equalization formula for intergovernmental grants, and analyses,by a simple model, the impact of parameters changes on productive efficiency of a local government.By this kind of efficiency we mean producing and providing, at minimum cost and at high quality, a output level of a public service at least equal to a standard, fixed by the central government for pursuing horizontal equity among jurisdictions. In some German Landers the municipal transfers system is broadly inspired by such a criterion, and the recent reform of Italian equalization grants system moves in this direction.

Suggested Citation

  • Alessandro Petretto, 2013. "Need Equalization Transfers and Productive Efficiency of Local Governments," Rivista italiana degli economisti, Società editrice il Mulino, issue 1, pages 25-46.
    • Handle: RePEc:mul:jqat1f:doi:10.1427/72898:y:2013:i:1:p:25-46
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    References listed on IDEAS

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    1. Robin Boadway & Anwar Shah, 2007. "Intergovernmental Fiscal Transfers : Principles and Practice," World Bank Publications - Books, The World Bank Group, number 7171, December.
    2. Duc Hong Vo, 2010. "The Economics Of Fiscal Decentralization," Journal of Economic Surveys, Wiley Blackwell, vol. 24(4), pages 657-679, September.
    3. Mr. Bob Searle & Mr. Ehtisham Ahmad, 2005. "On the Implementation of Transfers to Subnational Governments," IMF Working Papers 2005/130, International Monetary Fund.
    4. Besley, Timothy, 2007. "Principled Agents?: The Political Economy of Good Government," OUP Catalogue, Oxford University Press, number 9780199283910.
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    Cited by:

    1. Alessandro Petretto, 2014. "A note on standard costs criteria for allocating the Italian national health fund to Regions," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2014(2), pages 5-21.

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    More about this item

    Keywords

    Need Equalization; Local Public Services Provision; Quality and Cost-Efficiency.;
    All these keywords.

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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