Fiscal Equalisation: Some Questions of Design
AbstractThe case for fiscal equalisation can arise because of differences between states' average incomes or populations. In this paper, we examine the latter in a simple case, using different formulations of the social welfare function: Benthamite; Rawlsian; and Nash. We distinguish, in the process, two different understandings of efficiency abroad in economics — a Paretian notion, that is irrelevant to the case in hand; and a quasi-utilitarian sense. We conclude that fiscal equalisation is required only in the Rawlsian case. In all other cases, private goods consumption should be equalised — but no fiscal equalisation is required.
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Bibliographic InfoArticle provided by SIPI Spa in its journal Rivista di Politica Economica.
Volume (Year): 94 (2004)
Issue (Month): 4 (July-August)
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Find related papers by JEL classification:
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
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