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Closing the Gap: Fiscal Imbalances and Intergovernmental Transfers in Developed Federations

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  • Richard M Bird

    (International Tax Program, Rotman School of Management, University of Toronto, 105 St. George Street, Toronto, Ontario M5S 3E6, Canada)

  • Andrey V Tarasov

    (Department of Economics, University of Toronto, 150 St. George Street, Toronto, Ontario M5S 3G7, Canada)

Abstract

This paper discusses the concepts of vertical fiscal imbalance (the fiscal gap) and horizontal fiscal imbalance (equalization) and uses several statistics to measure these concepts for the eight developed federal countries: Australia, Austria, Belgium, Canada, Germany, Spain, Switzerland, and the United States. Although the periods covered and the detail provided vary from country to country because of limitations in data availability, the overall coverage in this paper seems more complete and comparable than in previous studies. The paper also outlines briefly the types of intergovernmental fiscal transfers used to deal with fiscal imbalances in the eight countries under consideration. Although this account is necessarily highly condensed, given the complexity of transfer systems in most countries, the frequency with which changes are made, and the difficulty of obtaining complete information, it is nonetheless broadly accurate.

Suggested Citation

  • Richard M Bird & Andrey V Tarasov, 2004. "Closing the Gap: Fiscal Imbalances and Intergovernmental Transfers in Developed Federations," Environment and Planning C, , vol. 22(1), pages 77-102, February.
    • Handle: RePEc:sae:envirc:v:22:y:2004:i:1:p:77-102
    DOI: 10.1068/c0328
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    References listed on IDEAS

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    1. Bird, Richard, 2010. "Taxation and Development," World Bank - Economic Premise, The World Bank, issue 34, pages 1-5, September.
    2. Shankar, Raja & Shah, Anwar, 2001. "Bridging the economic divide within nations : a scorecard on the performance of regional development policies in reducing regional income disparities," Policy Research Working Paper Series 2717, The World Bank.
    3. Richard M Bird & François Vaillancourt, 2001. "Fiscal Arrangements for Maintaining an Effective State in Canada," Environment and Planning C, , vol. 19(2), pages 163-187, April.
    4. Ebel, Robert D. & Yilmaz, Serdar, 2002. "On the measurement and impact of fiscal decentralization," Policy Research Working Paper Series 2809, The World Bank.
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    7. Teresa Garcia-Milà & Therese J. McGuire, 2007. "Fiscal Decentralization in Spain: An Asymmetric Transition to Democracy," Chapters, in: Richard M. Bird & Robert D. Ebel (ed.), Fiscal Fragmentation in Decentralized Countries, chapter 7, Edward Elgar Publishing.
    8. Jorge Martinez-Vazquez & James Alm (ed.), 2003. "Public Finance in Developing and Transitional Countries," Books, Edward Elgar Publishing, number 2595.
    9. Bird, Richard M., 1993. "Threading the Fiscal Labyrinth: Some Issues in Fiscal Decentralization," National Tax Journal, National Tax Association;National Tax Journal, vol. 46(2), pages 207-227, June.
    10. Shankar, Raja & Shah, Anwar, 2003. "Bridging the Economic Divide Within Countries: A Scorecard on the Performance of Regional Policies in Reducing Regional Income Disparities," World Development, Elsevier, vol. 31(8), pages 1421-1441, August.
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    12. Oakland, William H., 1994. "Fiscal Equalization: An Empty Box?," National Tax Journal, National Tax Association, vol. 47(1), pages 199-209, March.
    13. Walter Hettich & Stanley L. Winer, 1986. "Vertical Imbalance in the Fiscal Systems of Federal States," Canadian Journal of Economics, Canadian Economics Association, vol. 19(4), pages 745-765, November.
    14. Oakland, William H., 1994. "Fiscal Equalization: An Empty Box?," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(1), pages 199-209, March.
    15. Paul Bernd Spahn & Jan Werner, 2007. "Germany at the Junction Between Solidarity and Subsidiarity," Chapters, in: Richard M. Bird & Robert D. Ebel (ed.), Fiscal Fragmentation in Decentralized Countries, chapter 4, Edward Elgar Publishing.
    16. Antoni Castells, 2001. "The Role of Intergovernmental Finance in Achieving Diversity and Cohesion: The Case of Spain," Environment and Planning C, , vol. 19(2), pages 189-206, April.
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