Optimal Design of Intergovernmental Grants Under Asymmetric Information
This paper develops a theoretical explanation why it may be optimal for higher-level governments to pay categorical block grants or closed-ended matching grants to local governments. We consider a federation with two types of local governments which differ in the cost of providing public goods. The federal government redistributes between jurisdictions, but cannot observe the type of a jurisdiction. In this asymmetric information setting, it is shown that the second-best optimum can be implemented with the help of categorical block grants and closed-ended matching grants, but not with unconditional block grants or open-ended matching grants. Copyright Springer Science + Business Media, Inc. 2006
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 13 (2006)
Issue (Month): 1 (January)
|Contact details of provider:|| Web page: http://www.springer.com|
Postal:P.O. Box 86 04 46, 81631 Munich, Germany
Phone: +49 (0)89-9224-1281
Fax: +49 (0)89-907795-2281
Web page: http://www.iipf.org/index.htm
More information through EDIRC
|Order Information:||Web: http://www.springer.com/economics/public+finance/journal/10797/PS2|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bucovetsky, S. & Marchand, M. & Pestieau, P., 1998.
"Tax Competition and Revelation of Preferences for Public Expenditure,"
Journal of Urban Economics,
Elsevier, vol. 44(3), pages 367-390, November.
- BUCOVETSKY, Sam & MARCHAND, Maurice & PESTIEAU, Pierre, "undated". "Tax competition and revelation of preferences for public expenditure," CORE Discussion Papers RP 1352, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- BUCOVETSKY, Sam & MARCHAND, Maurice & PESTIEAU, Pierre, 1997. "Tax competition and revelation of preferences for public expenditure," CORE Discussion Papers 1997003, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Cornes, Richard C. & Silva, Emilson C. D., 2002. "Local public goods, inter-regional transfers and private information," European Economic Review, Elsevier, vol. 46(2), pages 329-356, February.
- Richard C. Cornes & Emilson C.D. Silva, 1996. "Local Public Goods, Inter-Regional Transfers and Private Information," Keele Department of Economics Discussion Papers (1995-2001) 96/11, Department of Economics, Keele University.
- Horst Raff & John Wilson, 1997. "Income Redistribution with Well-Informed Local Governments," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 4(4), pages 407-427, November.
- Massimo Bordignon & Paolo Manasse & Guido Tabellini, 2001. "Optimal Regional Redistribution under Asymmetric Information," American Economic Review, American Economic Association, vol. 91(3), pages 709-723, June.
- Massimo Bordignon & Paolo Manasse & Guido Tabellini, "undated". "Optimal Regional Redistribution Under Asymmetric Information," Working Papers 93, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Bordignon, Massimo & Manasse, Paolo & Tabellini, Guido, 1996. "Optimal Regional Redistribution Under Asymmetric Information," CEPR Discussion Papers 1437, C.E.P.R. Discussion Papers.
- Lockwood, Ben, 1999. "Inter-regional insurance," Journal of Public Economics, Elsevier, vol. 72(1), pages 1-37, April.
- Lockwood, Ben, 1997. "Inter-Regional Insurance," Discussion Papers 9703, Exeter University, Department of Economics.
- Richard C. Cornes & Emilson C. D. Silva, 2003. "Public Good Mix in a Federation with Incomplete Information," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 5(2), pages 381-397, April.
- Baretti, Christian & Huber, Bernd & Lichtblau, Karl, 2002. "A Tax on Tax Revenue: The Incentive Effects of Equalizing Transfers: Evidence from Germany," Munich Reprints in Economics 20129, University of Munich, Department of Economics.
- Bird, Richard M. & Smart, Michael, 2002. "Intergovernmental Fiscal Transfers: International Lessons for Developing Countries," World Development, Elsevier, vol. 30(6), pages 899-912, June.
- Bev Dahlby, 1996. "Fiscal externalities and the design of intergovernmental grants," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 3(3), pages 397-412, July.
- Wallace E. Oates, 1999. "An Essay on Fiscal Federalism," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1120-1149, September. Full references (including those not matched with items on IDEAS)