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Fiscal Institutions and the Size and Inter-Regional Distribution of Public Redistribution. (Instituciones Fiscales y el Tamaño y Distribución Inter-Regional de la Redistribución Pública)

Author

Listed:
  • Raúl Alberto Ponce Rodríguez

    () (Universidad Autónoma de Ciudad Juárez, Instituto de Ciencias Sociales y Administración. Ciudad Juárez, Chihuahua. México.)

  • Juan Medina Guirado

    () (Universidad Autónoma de Ciudad Juárez, Instituto de Ciencias Sociales y Administración. Ciudad Juárez, Chihuahua. México.)

Abstract

Fiscal institutions, which are responsible for the delegation of tax and spending powers among different tiers of governments, are important determinants of the size and efficiency of public redistribution. In this paper we develop a comparative analysis of the impact of fiscal decentralization vis-à-vis tax revenue sharing on the government’s effort to redistribute income. The main findings are: first, the size of the national budget for public redistribution is the same under fiscal decentralization and tax revenue sharing. Second, different fiscal institutions lead to different regional distributions of public transfers. Third, when choosing between decentralization and tax revenue sharing, there is a tradeoff between the efficiency and the regional effort of the government to redistribute income.

Suggested Citation

  • Raúl Alberto Ponce Rodríguez & Juan Medina Guirado, 2018. "Fiscal Institutions and the Size and Inter-Regional Distribution of Public Redistribution. (Instituciones Fiscales y el Tamaño y Distribución Inter-Regional de la Redistribución Pública)," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(1), pages 1-42, May.
  • Handle: RePEc:ere:journl:v:xxxvii:y:2018:i:1:p:1-42
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    References listed on IDEAS

    as
    1. Raúl A. Ponce-Rodríguez & Charles R. Hankla & Jorge Martinez-Vazquez & Eunice Heredia-Ortiz, 2016. "Political institutions and federalism: a “strong” decentralization theorem," Working Papers. Collection A: Public economics, governance and decentralization 1604, Universidade de Vigo, GEN - Governance and Economics research Network.
    2. Michael Keen, 1998. "Vertical Tax Externalities in the Theory of Fiscal Federalism," IMF Staff Papers, Palgrave Macmillan, vol. 45(3), pages 454-485, September.
    3. Devereux, M.P. & Lockwood, B. & Redoano, M., 2007. "Horizontal and vertical indirect tax competition: Theory and some evidence from the USA," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 451-479, April.
    4. Atkinson, A. B. & Stiglitz, J. E., 1976. "The design of tax structure: Direct versus indirect taxation," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 55-75.
    5. Pauly, Mark V., 1973. "Income redistribution as a local public good," Journal of Public Economics, Elsevier, vol. 2(1), pages 35-58, February.
    6. Robin Boadway & Michael Keen, 1996. "Efficiency and the optimal direction of federal-state transfers," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 3(2), pages 137-155, May.
    7. Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association;National Tax Journal, vol. 52(2), pages 269-304, June.
    8. Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 269-304, June.
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    More about this item

    Keywords

    Redistribution; Inter-regional externalities; Federalism; Structure and scope of government;

    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H1 - Public Economics - - Structure and Scope of Government

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