Resource Rents, Cost Differences and Fiscal Equalization
It has been argued that the fiscal equalization process in Australia, which transfers wealth between states, has efficiency costs. Here, the author shows that equalization transfers can be efficiency enhancing. Further, it is shown that, under certain assumptions about interstate differences in costs of production and resource endowments, such transfers may need to favor relatively high cost and resource rich states, such as Western Australia and Queensland, while, under other assumptions about diversity, they should favor relatively resource poor and low cost states, such as Victoria and New South Wales. Copyright 1995 by The Economic Society of Australia.
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Volume (Year): 71 (1995)
Issue (Month): 215 (December)
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