IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Beyond Gaps and Imbalances: Re-Structuring the Debate on Intergovernmental Fiscal Relations

  • Sharma, Chanchal Kumar

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.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://mpra.ub.uni-muenchen.de/32145/1/MPRA_paper_32145.pdf
File Function: original version
Download Restriction: no

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 32145.

as
in new window

Length:
Date of creation: 10 May 2010
Date of revision:
Handle: RePEc:pra:mprapa:32145
Contact details of provider: Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: http://mpra.ub.uni-muenchen.de

More information through EDIRC

References listed on IDEAS
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.:

as in new window
  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. 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.
  11. 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.
  12. Ronald MacDonald & Paul Hallwood, 2004. "The Economic Case for Fiscal Federalism in Scotland," Working papers 2004-42, University of Connecticut, Department of Economics.
  13. 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.
  14. Cai, Hongbin & Treisman, Daniel, 2004. "State corroding federalism," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 819-843, March.
  15. Isabelle Joumard & Per Mathis Kongsrud, 2003. "Fiscal Relations across Government Levels," OECD Economics Department Working Papers 375, OECD Publishing.
  16. 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.
  17. 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.
  18. Oates, Wallace E., 1993. "Fiscal Decentralization and Economic Development," National Tax Journal, National Tax Association, vol. 46(2), pages 237-43, June.
  19. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
  20. Michael Keen, 1997. "Vertical Tax Externalities in the Theory of Fiscal Federalism," IMF Working Papers 97/173, International Monetary Fund.
  21. Robin Boadway & Jean-Francois Tremblay, 2006. "A Theory of Vertical Fiscal Imbalance," Working Papers 1072, Queen's University, Department of Economics.
  22. Sharma, Chanchal Kumar, 2011. "Multilevel Fiscal Governance in a Balanced Policy Environment," MPRA Paper 30282, University Library of Munich, Germany.
  23. 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.
  24. 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.
  25. Lockwood, Ben, 1997. "Inter-Regional Insurance," Discussion Papers 9703, Exeter University, Department of Economics.
  26. 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.
  27. 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.
  28. 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.
  29. 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.
  30. Wilson, L-S, 1996. "Federal-State Fiscal Arrangements in Malaysia," Working Papers 07, John Deutsch Institute for the Study of Economic Policy.
  31. 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.
  32. Robin Boadway, 2003. "The Theory and Practice of Equalization," Working Papers 1016, Queen's University, Department of Economics.
  33. 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.
  34. Guiseppe Pisauro, 2001. "Intergovernmental Relations and Fiscal Discipline; Between Common Tax Resources and Soft Budget Constraints," IMF Working Papers 01/65, International Monetary Fund.
  35. 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.
  36. Dahlby, Bev, 2009. "The Optimal Taxation Approach to Intergovernmental Grants," Working Papers 2009-16, University of Alberta, Department of Economics.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

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 you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.