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Ricardian equivalence for local government bonds: A utility maximization approach

  • Hatfield, John William
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    We show that Ricardian equivalence holds for local public finance if and only if subnational units use property taxes. However, for other tax bases, the unique equilibrium has the same economic outcome as in models where districts may not issue debt.

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    Article provided by Elsevier in its journal Economics Letters.

    Volume (Year): 107 (2010)
    Issue (Month): 2 (May)
    Pages: 148-151

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    Handle: RePEc:eee:ecolet:v:107:y:2010:i:2:p:148-151
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    1. Akai, Nobuo, 1994. "Ricardian equivalence for local government bonds : Budget constraint approach," Economics Letters, Elsevier, vol. 44(1-2), pages 191-195.
    2. Mieszkowski, Peter & Zodrow, George R, 1989. "Taxation and the Tiebout Model: The Differential Effects of Head Taxes, Taxes on Land Rents, and Property Taxes," Journal of Economic Literature, American Economic Association, vol. 27(3), pages 1098-1146, September.
    3. Seater, John J, 1993. "Ricardian Equivalence," Journal of Economic Literature, American Economic Association, vol. 31(1), pages 142-90, March.
    4. Feldstein, Martin S, 1977. "The Surprising Incidence of a Tax on Pure Rent: A New Answer to an Old Question," Journal of Political Economy, University of Chicago Press, vol. 85(2), pages 349-60, April.
    5. Bailey, Martin J., 1993. "Note on Ricardian equivalence," Journal of Public Economics, Elsevier, vol. 51(3), pages 437-446, July.
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