Tobin Meets Oates: Solidarity and the Optimal Fiscal Federal Structure
AbstractWe explore the implications for the optimal degree of fiscal decentralization when peoples preferences for goods and services, which classic treatments of fiscal federalism (Oates, 1972) place in the purview of local governments, exhibit specific egalitarianism (Tobin, 1970), or solidarity. We find that a system in which the central government provides a common minimum level of the publicly provided good, and local governments are allowed to use their own resources to provide an even higher local level, performs better from an efficiency perspective relative to all other systems analyzed for a relevant range of preferences over solidarity.
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Bibliographic InfoPaper provided by Barcelona Graduate School of Economics in its series Working Papers with number 486.
Date of creation: Jul 2010
Date of revision:
Fiscal decentralization; specific egalitarianism; solidarity; externalities;
Other versions of this item:
- Xavier Calsamiglia & Teresa Garcia-Milà & Therese J. McGuire, 2010. "Tobin meets Oates: Solidarity and the optimal fiscal federal structure," Economics Working Papers 1226, Department of Economics and Business, Universitat Pompeu Fabra.
- H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
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- Alesina, Alberto & Di Tella, Rafael & MacCulloch, Robert, 2004.
"Inequality and happiness: are Europeans and Americans different?,"
Journal of Public Economics,
Elsevier, vol. 88(9-10), pages 2009-2042, August.
- Alesina, Alberto F & Di Tella, Rafael & MacCulloch, Robert, 2001. "Inequality and Happiness: Are Europeans and Americans Different?," CEPR Discussion Papers 2877, C.E.P.R. Discussion Papers.
- Di Tella, Rafael & Alesina, Alberto & MacCulloch, Robert, 2004. "Inequality and Happiness: Are Europeans and Americans Different?," Scholarly Articles 4553007, Harvard University Department of Economics.
- Alberto Alesina & Rafael Di Tella & Robert MacCulloch, 2001. "Inequality and Happiness: Are Europeans and Americans Different?," NBER Working Papers 8198, National Bureau of Economic Research, Inc.
- Alberto Alesina & Rafael Di Tella & Robert MacCulloch, 2001. "Inequality and Happiness: Are Europeans and Americans Different?," Harvard Institute of Economic Research Working Papers 1938, Harvard - Institute of Economic Research.
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