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Federalism and Inter-Regional Redistribution

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  • Jonathan Rodden

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    (Stanford University)

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    Abstract

    Why do some federations implement highly progressive intergovernmental transfer schemes while others do not? First, this essay establishes some stylized facts, using provincial-level data from nine federations to measure the extent of inter-regional redistribution achieved through intergovernmental transfers in each country. Second, it explores sources of institutional variation that might help account for these persistent cross-country differences, focusing on theories of legislative bargaining, representation, and the distribution of income across regions. Third, it examines the historical conditions under which the basic institutions of federalism were selected.

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    Bibliographic Info

    Paper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2009/3.

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    Length: 37 pages
    Date of creation: 2009
    Date of revision:
    Handle: RePEc:ieb:wpaper:2009/4/doc2009-3

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    Keywords: Federalism; redistribution; inter-governmental transfers; representation.;

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    References

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    1. Ramón Barberán & Núria Bosch & Antoni Castells & Marta Espasa, 2000. "The Redistributive Power of the Central Government Budget," Working Papers 2000/6, Institut d'Economia de Barcelona (IEB).
    2. Worthington, Andrew C & Dollery, Brian E, 1998. " The Political Determination of Intergovernmental Grants in Australia," Public Choice, Springer, vol. 94(3-4), pages 299-315, March.
    3. Persson, Torsten & Tabellini, Guido, 1996. "Federal Fiscal Constitutions: Risk Sharing and Redistribution," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 979-1009, October.
    4. Wright, Gavin, 1974. "The Political Economy of New Deal Spending: An Econometric Analysis," The Review of Economics and Statistics, MIT Press, vol. 56(1), pages 30-38, February.
    5. Anderson, Gary M & Tollison, Robert D, 1991. "Congressional Influence and Patterns of New Deal Spending, 1933-1939," Journal of Law and Economics, University of Chicago Press, vol. 34(1), pages 161-75, April.
    6. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October.
    7. Romer, Thomas, 1975. "Individual welfare, majority voting, and the properties of a linear income tax," Journal of Public Economics, Elsevier, vol. 4(2), pages 163-185, February.
    8. Robin W. Boadway & Frank R. Flatters, 1982. "Efficiency and Equalization Payments in a Federal System of Government: A Synthesis and Extension of Recent Results," Canadian Journal of Economics, Canadian Economics Association, vol. 15(4), pages 613-33, November.
    9. Buchanan, James M & Faith, Roger L, 1987. "Secession and the Limits of Taxation: Toward a Theory of Internal Exit," American Economic Review, American Economic Association, vol. 77(5), pages 1023-31, December.
    10. Hans Pitlik & Friedrich Schneider & Harald Strotmann, 2005. "Legislative Malapportionment and the Politicization of Germany’s Intergovernmental Transfer System," CESifo Working Paper Series 1426, CESifo Group Munich.
    11. Bayoumi, Tamim & Masson, Paul R., 1995. "Fiscal flows in the United States and Canada: Lessons for monetary union in Europe," European Economic Review, Elsevier, vol. 39(2), pages 253-274, February.
    12. Erik Wibbels, 2005. "Decentralized Governance, Constitution Formation, and Redistribution," Constitutional Political Economy, Springer, vol. 16(2), pages 161-188, 06.
    13. Beramendi, Pablo, 2007. "Inequality and the Territorial Fragmentation of Solidarity," International Organization, Cambridge University Press, vol. 61(04), pages 783-820, October.
    14. Bolton, Patrick & Roland, Gérard, 1995. "The Break up of Nations: A Political Economy Analysis," CEPR Discussion Papers 1225, C.E.P.R. Discussion Papers.
    15. Milanovic, Branko, 2000. "The median-voter hypothesis, income inequality, and income redistribution: an empirical test with the required data," European Journal of Political Economy, Elsevier, vol. 16(3), pages 367-410, September.
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    Cited by:
    1. Albert Solé-Ollé, 2013. "Inter-regional redistribution through infrastructure investment: tactical or programmatic?," Public Choice, Springer, vol. 156(1), pages 229-252, July.

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