Tobin meets Oates: Solidarity and the optimal fiscal federal structure
AbstractWe explore the implications for the optimal degree of fiscal decentralization when people’s 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 Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1226.
Date of creation: Jul 2010
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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," Working Papers 486, Barcelona Graduate School of Economics.
- H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-07-24 (All new papers)
- NEP-PBE-2010-07-24 (Public Economics)
- NEP-URE-2010-07-24 (Urban & Real Estate Economics)
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- 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.
- 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.
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