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A Note on the Dynamic Analysis of Fiscal Competition

Author

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  • Toshiki Tamai

    (Graduate School of Economics, Nagoya University, Furo-Cho, Chikusa-ku, Nagoya 464-8601, Japan, tamai@soec.nagoya-u.ac.jp)

Abstract

This note presents an analysis of dynamic aspects of fiscal competition in a model with local capital accumulation. This shows that, even when a head tax is available, the optimal capital tax rate is generally non-zero. In addition, a decentralised equilibrium without a head tax might be characterised by overprovision of local public goods in a dynamic fiscal competition model. The source of inefficiency is overaccumulation of local capital.

Suggested Citation

  • Toshiki Tamai, 2008. "A Note on the Dynamic Analysis of Fiscal Competition," Urban Studies, Urban Studies Journal Limited, vol. 45(3), pages 651-657, March.
    • Handle: RePEc:sae:urbstu:v:45:y:2008:i:3:p:651-657
    DOI: 10.1177/0042098007087339
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    References listed on IDEAS

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    Cited by:

    1. Tamai, Toshiki, 2022. "Tax competition versus tax coordination in a multi-region endogenous growth model with an integrated capital market," Economic Modelling, Elsevier, vol. 114(C).
    2. Maebayashi, Noritaka & Morimoto, Keiichi, 2022. "Global Corporate Income Tax Competition, Knowledge Spillover, and Growth," MPRA Paper 112781, University Library of Munich, Germany.
    3. Huang, Wei Hong & Chen, Yang & Rudkin, Simon, 2014. "Dynamic Fiscal competition with public infrastructure investment: Austerity and attracting capital inflow," RIEI Working Papers 2014-03, Xi'an Jiaotong-Liverpool University, Research Institute for Economic Integration, revised 02 Mar 2016.
    4. Maebayashi, Noritaka & Morimoto, Keiichi, 2022. "Global Corporate Income Tax Competition, Knowledge Spillover, and Growth," MPRA Paper 112790, University Library of Munich, Germany.

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