Optimal Fiscal Policy for State and Local Government
State and Local Government services are enjoyed by two groups, residents and non-residents: similarly, taxes are borne by both groups. This paper addresses the question: if state and local governments act so as to maximize their residents' welfare, and if they cannot distinguish between individual residents and non-residents but know the aggregate characteristics of the two groups, what set of taxes and public goods should they choose? Some of the results are: i) even when all goods are taxable and equity is ignored, the existence of non-resident consumption makes uniform taxation non-optimal; ii) in some non-trivial cases, whether a good should be taxed or subsidized is independent of its own-price elasticity; iii) central cities may be subsidized by suburban residents; and iv) the ability of state and local governments to redistribute is inversely proportional to the openness of the economy.
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||1978|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (613) 533-2250
Fax: (613) 533-6668
Web page: http://qed.econ.queensu.ca/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:qed:wpaper:291. 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: (Mark Babcock)
If references are entirely missing, you can add them using this form.