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Taxes, Federal Grants, Local Public Spending, and Growth

Author

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  • Heng-fu Zou

    (Policy Research Department, The World Bank
    Institute of Advanced Economic Studies, Wuhan University)

Abstract

In a dynamic model with both private and local public capital accumulation, this paper examines how federal and local income taxes, local consumption tax, and federal matching grants for local public consumption and local public investment affect the long-run equilibrium Eqequilibria. of private consumption, private capital accumulation, local public consumption, and local public capital stock.

Suggested Citation

  • Heng-fu Zou, 1994. "Taxes, Federal Grants, Local Public Spending, and Growth," CEMA Working Papers 78, China Economics and Management Academy, Central University of Finance and Economics.
  • Handle: RePEc:cuf:wpaper:78
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    References listed on IDEAS

    as
    1. Zou Heng-fu, 1994. "Dynamic Effects of Federal Grants on Local Spending," Journal of Urban Economics, Elsevier, vol. 36(1), pages 98-115, July.
    2. Edward M. Gramlich & Harvy Galper, 1973. "State and Local Fiscal Behavior and Federal Grant Policy," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 4(1), pages 15-66.
    3. Gramlich, Edward M, 1969. "State and Local Governments and Their Budget Constraint," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 10(2), pages 163-182, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Thushyanthan Baskaran & Lars P. Feld & Jan Schnellenbach, 2014. "Fiscal Federalism, Decentralization and Economic Growth: Survey and Meta-Analysis," CESifo Working Paper Series 4985, CESifo Group Munich.
    2. Duranton, Gilles & Deo, Stephane, 1999. "Financing Productive Local Public Goods," Journal of Urban Economics, Elsevier, vol. 45(2), pages 264-286, March.
    3. Zou, Heng-fu, 1993. "A note on the Bauer-Kornai investment cycle theory," China Economic Review, Elsevier, pages 75-81.
    4. Swaroop, Vinaya & Jha, Shikha & Sunil Rajkumar, Andrew, 2000. "Fiscal effects of foreign aid in a federal system of governance: The case of India," Journal of Public Economics, Elsevier, pages 307-330.
    5. Keshab Bhattarai, 2007. "Input–Output and General Equilibrium Models for Hull and Humber Region in England," Atlantic Economic Journal, Springer;International Atlantic Economic Society, pages 473-490.
    6. Zhang, Tao & Zou, Heng-fu, 2001. "The growth impact of intersectoral and intergovernmental allocation of public expenditure: With applications to China and India," China Economic Review, Elsevier, vol. 12(1), pages 58-81.
    7. repec:tkp:ijsrsy:v:2:y:2012:i:1:p:57-70 is not listed on IDEAS
    8. Liutang Gong & Heng-fu Zou, 2003. "Fiscal Federalism, Public Capital Formation, and Endogenous Growth," Annals of Economics and Finance, Society for AEF, vol. 4(2), pages 471-490, November.
    9. Tao Zhang & Heng-fu Zou, 2012. "Designing Intergovernmental Transfers in Russia: A Simulation Study," CEMA Working Papers 543, China Economics and Management Academy, Central University of Finance and Economics.
    10. Marc Tomljanovich, 2004. "The Role of State Fiscal Policy in State Economic Growth," Contemporary Economic Policy, Western Economic Association International, vol. 22(3), pages 318-330, July.
    11. Gong, Liutang & Zou, Heng-fu, 2002. "Optimal taxation and intergovernmental transfer in a dynamic model with multiple levels of government," Journal of Economic Dynamics and Control, Elsevier, vol. 26(12), pages 1975-2003, October.
    12. Zhang, Tao & Zou, Heng-fu, 1998. "Fiscal decentralization, public spending, and economic growth in China," Journal of Public Economics, Elsevier, pages 221-240.
    13. Zhiguo Wang & Liang Ma, 2014. "Fiscal Decentralization in China: A Literature Review," Annals of Economics and Finance, Society for AEF, vol. 15(1), pages 51-65, May.
    14. Davoodi, Hamid & Zou, Heng-fu, 1998. "Fiscal Decentralization and Economic Growth: A Cross-Country Study," Journal of Urban Economics, Elsevier, vol. 43(2), pages 244-257, March.
    15. Bodman, Philip & Campbell, Harry & Le, Thanh, 2012. "Public investment, taxation, and long-run output in economies with multi-level governments," Economic Modelling, Elsevier, vol. 29(5), pages 1603-1611.
    16. Nikolay Patonov, 2013. "Local Fiscal Capacity in the New Members of the European Union: Is It Efficient?," International Journal of Synergy and Research, ToKnowPress, vol. 2(1), pages 57-70.
    17. Zou, Heng-fu, 2012. "Optimal design of intergovernmental grants in a dynamic model," MPRA Paper 37427, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)
    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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