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Modelling Tax Decentralisation And Regional Growth

Author

Listed:
  • Ramiro Gil-Serrate

    () (Universidad de Zaragoza)

  • Julio López-Laborda

    () (Universidad de Zaragoza)

Abstract

. The aim of this paper is to determine a theoretical linkage between tax decentralisation and regional growth. For this purpose Zou’s (1996) analytical framework, which account for the potential effects of intergovernmental policies on regional growth, is considered. In this context a tax decentralisation indicator with a flypaper effect is introduced and a Cobb-Douglas form for the production technology is specified. As a consequence an optimal level of tax decentralisation for regional growth is obtained, it depends on private and public capital productivities, the tax burden rate in the absence of decentralisation and the intensity of the flypaper effect. Finally a hypothesis for the Spanish economy is obtained. It will be checked empirically in subsequent work.

Suggested Citation

  • Ramiro Gil-Serrate & Julio López-Laborda, "undated". "Modelling Tax Decentralisation And Regional Growth," Working Papers 14-05 Classification-JEL , Instituto de Estudios Fiscales.
  • Handle: RePEc:hpe:wpaper:y:2005:i:14
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    Cited by:

    1. Juan González-Alegre, 2015. "Does fiscal decentralization affect the effectiveness of intergovernmental grants? European regional policy and Spanish autonomous regions," Papers in Regional Science, Wiley Blackwell, vol. 94(4), pages 817-847, November.

    More about this item

    Keywords

    tax decentralisation; general equilibrium analysis; regional growth.;

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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