Beyond Gaps and Imbalances: Re-Structuring the Debate on Intergovernmental Fiscal Relations
How do we know whether a country suffers from vertical fiscal imbalance (VFI)? What should be done about it? Academic appreciation of these issues in general, and the nature of political behaviour in particular, both have major implications for the way federations are fiscally structured. While the latter clearly is a problem of political negotiations, our focus is on the former, i.e., conceptual clarity, which precedes meaningful negotiations. Thus, the paper aims to clarify the multiple usages of the symbolically loaded terms VFI and VFG (Vertical Fiscal Gap) by critically engaging the fundamental assumptions and premises underlying these ostensibly similar notions. It proposes an alternative conceptual framework and introduces the concepts of Vertical Fiscal Asymmetry (VFA) and Vertical Fiscal Difference (VFD) that have the potential to better structure public debate on issues of vertical fiscal relations and stimulate a sensible appreciation of the problem and possible remedies.
|Date of creation:||10 May 2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robin Boadway, 2003. "The Theory and Practice of Equalization," Working Papers 1016, Queen's University, Department of Economics.
- Shah, Anwar, 2006.
"A practitioner's guide to intergovernmental fiscal transfers,"
Policy Research Working Paper Series
4039, The World Bank.
- Anwar Shah, 2006. "A Practitioner´s Guide to Intergovernmental Fiscal Transfers," Revista de Economía y Estadística, Universidad Nacional de Córdoba, Facultad de Ciencias Económicas, Instituto de Economía y Finanzas, vol. 0(2), pages 128-186, July.
- Sam Bucovetsky & Michael Smart, 2002.
"The Efficiency Consequences of Local Revenue Equalization: Tax Competition and Tax Distortions,"
CESifo Working Paper Series
767, CESifo Group Munich.
- Sam Bucovetsky & Michael Smart, 2006. "The Efficiency Consequences of Local Revenue Equalization: Tax Competition and Tax Distortions," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(1), pages 119-144, 01.
- Lockwood, B., 2000.
"Tax Competition and Tax Co-Ordination Under Destination and Origin Principles: A Synthesis,"
The Warwick Economics Research Paper Series (TWERPS)
567, University of Warwick, Department of Economics.
- Lockwood, Ben, 2001. "Tax competition and tax co-ordination under destination and origin principles: a synthesis," Journal of Public Economics, Elsevier, vol. 81(2), pages 279-319, August.
- Sharma, Chanchal Kumar, 2011. "Multilevel Fiscal Governance in a Balanced Policy Environment," MPRA Paper 30282, University Library of Munich, Germany.
- 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 745-65, November.
- Lockwood, Ben, 1997.
9703, Exeter University, Department of Economics.
- Gruber, Jon & Saez, Emmanuel, 2002.
"The elasticity of taxable income: evidence and implications,"
Journal of Public Economics,
Elsevier, vol. 84(1), pages 1-32, April.
- Jon Gruber & Emmanuel Saez, 2000. "The Elasticity of Taxable Income: Evidence and Implications," NBER Working Papers 7512, National Bureau of Economic Research, Inc.
- Myers, Gordon M., 1990.
"Optimality, free mobility, and the regional authority in a federation,"
Journal of Public Economics,
Elsevier, vol. 43(1), pages 107-121, October.
- Myers & G.M., 1989. "Optimality, Free Mobility And The Regional Authority In Federation," Working Papers 10, John Deutsch Institute for the Study of Economic Policy.
- G. C. Ruggeri & D. van Wart & G. K. Robertson & Rhoda Howard, 1993. "Vertical Fiscal Imbalance and the Reallocation of Tax Fields in Canada," Canadian Public Policy, University of Toronto Press, vol. 19(2), pages 194-215, June.
- Jonathan A. Rodden & Gunnar S. Eskeland (ed.), 2003. "Fiscal Decentralization and the Challenge of Hard Budget Constraints," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262182297, June.
- Robin Boadway & Jean-Francois Tremblay, 2006.
"A Theory of Vertical Fiscal Imbalance,"
1072, Queen's University, Department of Economics.
- Fisher, Ronald C., 1982. "Income and grant effects on local expenditure: The flypaper effect and other difficulties," Journal of Urban Economics, Elsevier, vol. 12(3), pages 324-345, November.
- Michael Keen, 1998.
"Vertical Tax Externalities in the Theory of Fiscal Federalism,"
IMF Staff Papers,
Palgrave Macmillan, vol. 45(3), pages 454-485, September.
- Michael Keen, 1997. "Vertical Tax Externalities in the Theory of Fiscal Federalism," IMF Working Papers 97/173, International Monetary Fund.
- Chris Matier & Lisa Wu & Harriet Jackson, . "Analysing Vertical Fiscal Imbalance in a Framework of Fiscal Sustainability," Working Papers-Department of Finance Canada 2001-23, Department of Finance Canada.
- Isabelle Joumard & Per Mathis Kongsrud, 2003.
"Fiscal Relations across Government Levels,"
OECD Economics Department Working Papers
375, OECD Publishing.
- James M. Buchanan & Richard A. Musgrave, 1999. "Public Finance and Public Choice: Two Contrasting Visions of the State," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262024624, June.
- Alexander Plekhanov & Raju Jan Singh, 2005.
"How Should Subnational Government Borrowing Be Regulated? Some Cross-Country Empirical Evidence,"
IMF Working Papers
05/54, International Monetary Fund.
- Alexander Plekhanov & Raju Singh, 2006. "How Should Subnational Government Borrowing Be Regulated?Some Cross-Country Empirical Evidence," IMF Staff Papers, Palgrave Macmillan, vol. 53(3), pages 4.
- Wilson, L-S, 1996. "Federal-State Fiscal Arrangements in Malaysia," Working Papers 07, John Deutsch Institute for the Study of Economic Policy.
- 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.
- Robin Boadway & Jean-François Tremblay, 2006. "A Theory of Fiscal Imbalance," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 62(1), pages 1-27, March.
- Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
- Rigmar Osterkamp & Markus Eller, 2003. "How Decentralised Is Government Activity?," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 1(1), pages 32-35, 02.
- Signe Krogstrup, 2002. "What do Theories of Tax Competition Predict for Capital Taxes in EU Countries? A Review of the Tax Competition Literature," IHEID Working Papers 05-2002, Economics Section, The Graduate Institute of International Studies.
- Jorge Martinez-Vazquez, 2007. "Revenue Assignments in the Practice of Fiscal Decentralization," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0709, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
- Weingast, Barry R & Shepsle, Kenneth A & Johnsen, Christopher, 1981. "The Political Economy of Benefits and Costs: A Neoclassical Approach to Distributive Politics," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 642-64, August.
- 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.
- Richard M Bird & Andrey V Tarasov, 2004. "Closing the gap: fiscal imbalances and intergovernmental transfers in developed federations," Environment and Planning C: Government and Policy, Pion Ltd, London, vol. 22(1), pages 77-102, February.
- Cai, Hongbin & Treisman, Daniel, 2004. "State corroding federalism," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 819-843, March.
- McLure, Charles E. Jr., 2001. "The Tax Assignment Problem: Ruminations on How Theory and Practice Depend on History," National Tax Journal, National Tax Association, vol. 54(n. 2), pages 339-64, June.
- Guiseppe Pisauro, 2001. "Intergovernmental Relations and Fiscal Discipline; Between Common Tax Resources and Soft Budget Constraints," IMF Working Papers 01/65, International Monetary Fund.
- Ronald MacDonald & Paul Hallwood, 2004. "The Economic Case for Fiscal Federalism in Scotland," Working papers 2004-42, University of Connecticut, Department of Economics.
- Eckhard Janeba & Guttorm Schjelderup, 2002. "Why Europe Should Love Tax Competition - and the U.S. Even More So," NBER Working Papers 9334, National Bureau of Economic Research, Inc.
- Robin Boadway, 2004. "Should the Canadian Federation be Rebalanced?," University of Western Ontario, Economic Policy Research Institute Working Papers 20041, University of Western Ontario, Economic Policy Research Institute.
- Dahlby, Bev, 2009. "The Optimal Taxation Approach to Intergovernmental Grants," Working Papers 2009-16, University of Alberta, Department of Economics.
- Oates, Wallace E., 1993. "Fiscal Decentralization and Economic Development," National Tax Journal, National Tax Association, vol. 46(2), pages 237-43, June.
- Martin Besfamille & Ben Lockwood, 2008. "Bailouts In Federations: Is A Hard Budget Constraint Always Best?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(2), pages 577-593, 05.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:32145. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht)
If references are entirely missing, you can add them using this form.