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Electoral rules and incentive effects of fiscal transfers: evidence from Germany

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Author Info

  • Peter Egger

    ()
    (ETH Zurich, CEPR & CESifo)

  • Marko Koethenbuerger

    ()
    (University of Copenhagen & CESifo)

  • Michael Smart

    ()
    (University of Toronto & CESifo)

Abstract

The impact electoral rules and fiscal equalization programs have for local public finance are separately analyzed in the literature. This paper empirically analyzes whether legislator elected under different rules respond differently to changes in fiscal incentives. Using a reform of the electoral rule and the equalization system as a natural experiment, we find that municipalities which elect legislators under proportional rule react less strongly to changes in fiscal incentives.

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Bibliographic Info

Paper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2010/44.

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Length: 30 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:ieb:wpaper:2010/10/doc2010-44

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Related research

Keywords: Electoral rule; form of municipal government; fiscal equalization; business tax rates; comparative political economy.;

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References

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  1. Peter Egger & Marko Koethenbuerger & Michael Smart, 2007. "Do Fiscal Transfers Alleviate Business Tax Competition? Evidence from Germany," CESifo Working Paper Series 1955, CESifo Group Munich.
  2. Bev Dahlby & Neil Warren, 2003. "Fiscal Incentive Effects of the Australian Equalisation System," The Economic Record, The Economic Society of Australia, The Economic Society of Australia, vol. 79(247), pages 434-445, December.
  3. Büttner, Thiess, 2005. "The Incentive Effect of Fiscal Equalization Transfers on Tax Policy," Center for European, Governance and Economic Development Research Discussion Papers 37, University of Goettingen, Department of Economics.
  4. Sam Bucovetsky & Michael Smart, 2006. "The Efficiency Consequences of Local Revenue Equalization: Tax Competition and Tax Distortions," Journal of Public Economic Theory, Association for Public Economic Theory, Association for Public Economic Theory, vol. 8(1), pages 119-144, 01.
  5. James J. Heckman, 1977. "Dummy Endogenous Variables in a Simultaneous Equation System," NBER Working Papers 0177, National Bureau of Economic Research, Inc.
  6. Michael Smart, 2007. "Raising taxes through equalization," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 40(4), pages 1188-1212, November.
  7. Persson, Torsten & Roland , Gérard & Tabellini, Guido, 1997. "Comparative Politics and Public Finance," Seminar Papers, Stockholm University, Institute for International Economic Studies 633, Stockholm University, Institute for International Economic Studies.
  8. Nicola Persico & Alessandro Lizzeri, 2001. "The Provision of Public Goods under Alternative Electoral Incentives," American Economic Review, American Economic Association, American Economic Association, vol. 91(1), pages 225-239, March.
  9. Michael Smart, 1998. "Taxation and Deadweight Loss in a System of Intergovernmental Transfers," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 31(1), pages 189-206, February.
  10. Marko Köthenbürger, 2002. "Tax Competition and Fiscal Equalization," International Tax and Public Finance, Springer, Springer, vol. 9(4), pages 391-408, August.
  11. Masayoshi Hayashi & Robin Boadway, 2001. "An empirical analysis of intergovernmental tax interaction: the case of business income taxes in Canada," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 34(2), pages 481-503, May.
  12. Jon Gruber & Emmanuel Saez, 2000. "The Elasticity of Taxable Income: Evidence and Implications," NBER Working Papers 7512, National Bureau of Economic Research, Inc.
  13. Stephen Coate & Brian Knight, 2009. "Government Form and Public Spending: Theory and Evidence from U.S. Municipalities," NBER Working Papers 14857, National Bureau of Economic Research, Inc.
  14. Reza Baqir, 2002. "Districting and Government Overspending," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 110(6), pages 1318-1354, December.
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Cited by:
  1. Emanuele Bracco & Alberto Brugnoli, 2012. "Runoff vs. plurality," Working Papers, Lancaster University Management School, Economics Department 23767067, Lancaster University Management School, Economics Department.

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