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Fiscal competition and the pattern of public spending

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  • Keen, Michael
  • Marchand, Maurice

Abstract

Much attention has been given to the impact of fiscal competition on the level of public expenditure, but relatively little to the impact on its composition. Using a broadly familiar and reasonably rich model of fiscal competition in the presence of mobile capital, this paper establishes a systematic bias in public spending patterns: starting from the non-cooperative equilibrium, and holding tax rates constant, welfare would be improved by a coordinated reduction in the provision of local public inputs and a corresponding increase in the public provision of local public goods benefiting immobile consumers.
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(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Keen, Michael & Marchand, Maurice, 1997. "Fiscal competition and the pattern of public spending," Journal of Public Economics, Elsevier, vol. 66(1), pages 33-53, October.
    • Handle: RePEc:eee:pubeco:v:66:y:1997:i:1:p:33-53
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