Matching grants and Ricardian equivalence
AbstractThis paper investigates the effectiveness of matching grants to correct for interjurisdictional spillovers in the light of Bernheim general neutrality result. Indeed this result suggests that the usual argument that matching grants are needed to internalize the externality arising from the existence of interjuridictional spillovers is an artifact of the assumption that jurisdictions neglect the impact that their decisions have on the federal budget. Relaxing this assumption and using a classical model where the arbitrage resulting from labor mobility implies that redistribution has the properties of a public good, we find that matching grants are relevant although somewhat less ective. We also find that optimal matching rates are independent of the number of jurisdictions and their strategic variables contrarily to the case where jurisdictions ignore the impact of their decisions on the federal budget.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2001048.
Date of creation: 00 Oct 2001
Date of revision:
Contact details of provider:
Postal: Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium)
Fax: +32 10474304
Web page: http://www.uclouvain.be/core
More information through EDIRC
Fiscal Federalism; Ricardian Equivalence; Matching Grants;
Other versions of this item:
- Charles Figuieres & Jean Hindriks, 2001. "Matching Grants and Ricardian Equivalence," Working Papers 440, Queen Mary, University of London, School of Economics and Finance.
- FIGUIÈRES , Charles & HINDRIKS, Jean, . "Matching grants and Ricardian equivalence," CORE Discussion Papers RP -1559, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Barro, Robert J, 1974.
"Are Government Bonds Net Wealth?,"
Journal of Political Economy,
University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
- Wildasin, David E, 1991. "Income Redistribution in a Common Labor Market," American Economic Review, American Economic Association, vol. 81(4), pages 757-74, September.
- Jean Hindriks & Gareth D. Myles, 2000.
"Strategic Inter-Regional Transfers,"
417, Queen Mary, University of London, School of Economics and Finance.
- David E. Wildasin, 2000.
"Factor Mobility and Fiscal Policy in the EU: Policy Issues and Analytical Approaches,"
CESifo Working Paper Series
344, CESifo Group Munich.
- David E. Wildasin, 2000. "Factor mobility and fiscal policy in the EU: policy issues and analytical approaches," Economic Policy, CEPR & CES & MSH, vol. 15(31), pages 337-378, October.
- Wildasin, David E., 1999. "Factor mobility and fiscal policy in the EU: policy issues and analytical approaches," ZEW Discussion Papers 99-35, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Jan K. Brueckner, 1999. "Welfare Reform and the Race to the Bottom: Theory and Evidence," Southern Economic Journal, Southern Economic Association, vol. 66(2), pages 505-525, January.
- Boadway,Robin & Pestieau,Pierre & Wildasin,David, 1986.
"Tax-transfer policies and the voluntary provision of public goods,"
Discussion Paper Serie A
130, University of Bonn, Germany.
- Boadway, Robin & Pestieau, Pierre & Wildasin, David, 1989. "Tax-transfer policies and the voluntary provision of public goods," Journal of Public Economics, Elsevier, vol. 39(2), pages 157-176, July.
- Robin Boadway & Pierre Pestieau & David Wildasin, 1987. "Tax-Transfer Policies and the Voluntary Provision of Public Goods," Working Papers 682, Queen's University, Department of Economics.
- Boadway, R.W. & Pestieau, P. & Wildasin, D.E., 1987. "Tax-transfer policies and the voluntary provision of public goods," CORE Discussion Papers 1987019, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Charles Brown & Wallace E. Oates, 1987.
"Assistance to the Poor in a Federal System,"
NBER Working Papers
1715, National Bureau of Economic Research, Inc.
- Milleron, Jean-Claude, 1972. "Theory of value with public goods: A survey article," Journal of Economic Theory, Elsevier, vol. 5(3), pages 419-477, December.
- Bernheim, B Douglas, 1986. "On the Voluntary and Involuntary Provision of Public Goods," American Economic Review, American Economic Association, vol. 76(4), pages 789-93, September.
- repec:fth:louvco:0104 is not listed on IDEAS
- Wildasin, D.E., 1987.
"Nash equilibria in models of fiscal competition,"
CORE Discussion Papers
1987020, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Lockwood, Ben, 1999.
Journal of Public Economics,
Elsevier, vol. 72(1), pages 1-37, April.
- Hindriks, J., 1998. "Tax versus Transfer Competition," Discussion Papers 9808, Exeter University, Department of Economics.
- Andreas Pfingsten & Andreas Wagener, 1997. "Centralized vs. Decentralized Redistribution: A Case for Interregional Transfer Mechanisms," International Tax and Public Finance, Springer, vol. 4(4), pages 429-451, November.
- Jacques Drèze & Charles Figuières & Jean Hindriks, 2006.
"Voluntary Matching Grants can Forestall Social Dumping,"
06-13, LAMETA, Universtiy of Montpellier, revised Nov 2006.
- Jacques H. Drèze & Charles Figuières & Jean Hindriks, 2006. "Voluntary Matching Grants Can Forestall Social Dumping," CESifo Working Paper Series 1867, CESifo Group Munich.
- Jacques H. DREZE & Charles FIGUIERES & Jean, HINDRIKS, 2006. "Vountary matching grants can forestall social dumping," Discussion Papers (ECON - DÃ©partement des Sciences Economiques) 2006063, Université catholique de Louvain, Département des Sciences Economiques.
- DREZE, Jacques H. & FIGUIERES, Charles & HINDRIKS, Jean, 2006. "Voluntary matching grants can forestall social dumping," CORE Discussion Papers 2006111, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Robert Fenge & Volker Meier, 2006. "Subsidies for Wages and Infrastructure: How to Restrain Undesired Immigration," CESifo Working Paper Series 1741, CESifo Group Munich.
- Bloch, Francis & Zenginobuz, E. Unal, 2006. "Tiebout equilibria in local public good economies with spillovers," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1745-1763, September.
- Hikaru Ogawa, 2006. "Tax competition, spillovers, and subsidies," The Annals of Regional Science, Springer, vol. 40(4), pages 849-858, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alain GILLIS).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.