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

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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 eight industrially developed federations: Australia, Austria, Belgium, Canada, Germany, Spain, Switzerland, and the United States. Although the periods covered and the detail provided vary from country to country due to 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.

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  • Richard Bird & Andrey Tarasov, 2002. "Closing the Gap: Fiscal Imbalaces and Intergovernmental Transfers in Developed Federations," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0202, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  • Handle: RePEc:ays:ispwps:paper0202
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    9. M G Rao & A Das-Gupta, 1995. "Intergovernmental transfers and poverty alleviation," Environment and Planning C: Government and Policy, Pion Ltd, London, vol. 13(1), pages 1-23, February.
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    Cited by:

    1. Jorge Martinez-Vazquez & Cristian Sepúlveda, 2007. "The Municipal Transfer System in Nicaragua:Evaluation and Proposals for Reform," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0708, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    2. Luis A. Hierro & Pedro Atienza & David Patiño, 2007. "Inequality and Progressiveness in the Distribution of Revenues of the States in Federal Countries: A Comparitive Study," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0703, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    3. World Bank, 2004. "Stabilization and Fiscal Empowerment : The Twin Challenges Facing India's States, Volume 2. Detailed Report," World Bank Other Operational Studies 16775, The World Bank.
    4. Francois Vaillancourt & Richard M. Bird, 2005. "The Interregional Incidence of Public Budgets in Federations: Measurement Issues, Evidence from Canada, and Policy Relevance," International Tax Program Papers 0510, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto.
    5. Matteo Bobba & Jérémie Gignoux, 2011. "Policy-induced Social Interactions and Schooling Decisions," PSE - G-MOND WORKING PAPERS halshs-00962478, HAL.
    6. Dahlby, Bev & Rodden, Jonathan & Wilson, Sam, 2009. "A Median Voter Model of the Vertical Fiscal Gap," Working Papers 2009-14, University of Alberta, Department of Economics.
    7. C. Rangarajan & D. K. Srivastava, 2008. "Reforming India’S Fiscal Transfer System: Resolving Vertical And Horizontal Imbalances," Working Papers 2008-031, Madras School of Economics,Chennai,India.
    8. Gerard Turley & Darragh Flannery & Stephen McNena, 2015. "A Needs and Resources Assessment of Fiscal Equalisation in the Irish Local Government System," The Economic and Social Review, Economic and Social Studies, vol. 46(3), pages 459-484.
    9. Masurowski, Frank & Drechsler, Martin & Frank, Karin, 2016. "A spatially explicit assessment of the wind energy potential in response to an increased distance between wind turbines and settlements in Germany," Energy Policy, Elsevier, vol. 97(C), pages 343-350.
    10. Robin Boadway & Jean-Francois Tremblay, 2005. "A Theory of Vertical Fiscal Imbalance," Working Papers 2006-04, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
    11. Richard M. Bird, 2008. "Tax Assignment Revisited," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0805, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    12. Eyraud, Luc & Lusinyan, Lusine, 2013. "Vertical fiscal imbalances and fiscal performance in advanced economies," Journal of Monetary Economics, Elsevier, vol. 60(5), pages 571-587.
    13. Jorge Martinez-Vazquez & Cristian Sepúlveda, 2011. "Intergovernmental Transfers in Latin America: A Policy Reform Perspective," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1108, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    14. Luque, Carlos A. & Haddad, Eduardo A. & Lima, Gilberto T. & Sakurai, Sergio N. & Costa, Silvio M., 2011. "Impact assessment of interregional government transfers in Brazil: an input-output approach," MPRA Paper 31292, University Library of Munich, Germany.
    15. Hierro Recio, Luis Angel & Atienza Montero, Pedro & Gómez-Álvarez Díaz, Rosario, 2010. "La distribución de recursos entre Comunidades Autónomas. Una primera aproximación a los cambios derivados del nuevo modelo de financiación/The Distribution of Resources Between Autonomous Communities.," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 28, pages 61-76, Abril.
    16. Sharma, Chanchal Kumar, 2010. "Beyond Gaps and Imbalances: Re-Structuring the Debate on Intergovernmental Fiscal Relations," MPRA Paper 32145, University Library of Munich, Germany.
    17. Joan Costa-i-Font, 2010. "Unveiling Vertical State Downscaling: Identity and/or the Economy?," Europe in Question Discussion Paper Series of the London School of Economics (LEQs) 0, London School of Economics / European Institute.
    18. Juan Luís Gómez & Jorge Martinez-Vazquez & Cristian Sepúlveda, 2007. "Equalization Transfers in Romania: Current System and Proposals for Reform," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0701, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    19. Richard M. Bird, 2003. "Fiscal Flows, Fiscal Balance, and Fiscal Sustainability," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0302, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    20. Giannola, Adriano & Petraglia, Carmelo & Scalera, Domenico, 2016. "Net fiscal flows and interregional redistribution in Italy: A long-run perspective (1951–2010)," Structural Change and Economic Dynamics, Elsevier, vol. 39(C), pages 1-16.
    21. Richard Bird, 2001. "Fiscal Federalism in Russia: A Canadian Perspective," International Tax Program Papers 0409, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto, revised Dec 2003.
    22. José Manuel Cordero Ferrera & Francisco Pedraja Chaparro & Javier Suárez Pandiello & Alfonso Utrilla de la Hoz, 2013. "El índice de evolución de los ingresos tributarios del Estado y sus efectos sobre la PIE municipal," Hacienda Pública Española, IEF, vol. 206(3), pages 137-161, September.

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    Keywords

    intergovernmental transfers; fiscal imbalances;

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