Regional flows of federal taxes and transfers within the United States and Canada are used to analyse long-term fiscal flows (the redistributive element) and short-term responses to regional business cycles (the stabilization element). In the United States, long-run flows amount to 22 cents in the dollar while the stabilization effect is 31 cents in the dollar. In Canada the redistributive effect is larger (39 cents) and the stabilization effect smaller (17 cents). Federal flows appear to depend on the institutional structure of the country concerned. In both countries, however, the redistributive element is considerably larger than the amounts involved in the EC Structural Funds programme. As for stabilization, national fiscal policies in the EC appear to have been as effective as federal governments in the United States and Canada in cushioning shocks to incomes.
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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
1057.
Find related papers by JEL classification: H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
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