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Fitness landscape and tax planning: NK model for fiscal federalism

  • Faggini, Marisa
  • Parziale, Anna
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    Economic models of Fiscal Federalism, according to different settings, are generally linear and static, offering unique and deterministic solutions starting with simplifying assumptions. This paper rises from the idea to investigate how the decision-makers, abandoning their traditional economic models and focusing, instead, the attention on innovative components of evolutionary economics, can achieve better performance results, to organize and to optimize an economic system based on Fiscal Federalism. For this purpose, Fiscal Federalism must be understood as a dense network of economic relationships between different complex adaptive and co-evolving systems, the jurisdictions, linked by strong interdependencies. A better understanding of the links between interdependence will be provided by the Kauffman’ NK-model. The relevance of the NK-model in the study of economic organizations has been detected several times in the literature. These studies, however, neglect the problem of co-evolution, which instead underpins this paper.

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    File URL: http://mpra.ub.uni-muenchen.de/33770/6/MPRA_paper_33770.pdf
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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 33770.

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    Date of creation: 10 Sep 2011
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    Handle: RePEc:pra:mprapa:33770
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    1. Yingyi Qian & Barry R. Weingast, 1997. "Federalism as a Commitment to Reserving Market Incentives," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 83-92, Fall.
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    6. Casella, Alessandra & Frey, Bruno, 1992. "Federalism and clubs : Towards an economic theory of overlapping political jurisdictions," European Economic Review, Elsevier, vol. 36(2-3), pages 639-646, April.
    7. Blume, Lawrence E. & Durlauf, Steven N., 2005. "The Economy As an Evolving Complex System III: Current Perspectives and Future Directions," OUP Catalogue, Oxford University Press, number 9780195162592, March.
    8. Richard Miller Bird, 1999. "Rethinking Subnational Taxes; A New Look At Tax Assignment," IMF Working Papers 99/165, International Monetary Fund.
    9. Thorbj, rn Knudsen, 2002. "Economic selection theory," Journal of Evolutionary Economics, Springer, vol. 12(4), pages 443-470.
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    15. Friedman, Daniel, 1991. "Evolutionary Games in Economics," Econometrica, Econometric Society, vol. 59(3), pages 637-66, May.
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    17. Rubinfeld, Daniel L., 1987. "The economics of the local public sector," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 2, chapter 11, pages 571-645 Elsevier.
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