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Modelling tax decentralisation and regional growth

  • Ramiro Gil-Serrate

    ()

  • Julio López-Laborda

    ()

The aim of this paper is to determine a theoretical linkage between tax decentralisation and regional growth. For this purpose a two fiscal tiers growth model is specified. First, working on Zou (1996) analytical framework, which account for the potential effects of intergovernmental policies on regional growth, a tax decentralisation process is brought in. Next its original model is expanded taking into account such process. It is shown that the effect of tax decentralisation on regional growth depends on the existing relationship between private and regional public capital productivities ratio and their stocks ratio square root. Finally a hypothesis for the Spanish economy is obtained. It will be checked empirically in subsequent work. Keywords: tax decentralisation; general equilibrium analysis; regional growth JEL classification: H70; O40; R13

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa04p194.

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Date of creation: Aug 2004
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Handle: RePEc:wiw:wiwrsa:ersa04p194
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  1. Martinez-Vazquez, Jorge & McNab, Robert M., 2003. "Fiscal Decentralization and Economic Growth," World Development, Elsevier, vol. 31(9), pages 1597-1616, September.
  2. Hamid Davoodi & Heng-fu Zou, 1996. "Fiscal Decentralization and Economic Growth: A Cross-Country Study," CEMA Working Papers 98, China Economics and Management Academy, Central University of Finance and Economics.
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  7. Miguel Ángel López García, . "La Vivienda Y La Reforma Fiscal De 1998: Un Ejercicio De Simulación(*)," Working Papers 7-04 Classification-JEL :, Instituto de Estudios Fiscales.
  8. Ulrich Thießen, 2000. "Fiscal Federalism in Western European and Selected Other Countries: Centralization or Decentralization? What Is Better for Economic Growth?," Discussion Papers of DIW Berlin 224, DIW Berlin, German Institute for Economic Research.
  9. Liutang Gong & Heng-fu Zou, 2003. "Fiscal Federalism, Public Capital Formation, and Endogenous Growth," Annals of Economics and Finance, Society for AEF, vol. 4(2), pages 471-490, November.
  10. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S103-26, October.
  11. Tao Zhang & Heng-fu Zou, 1996. "Fiscal decentralization, public spending, and economic growth in China," Policy Research Working Paper Series 1608, The World Bank.
  12. repec:rus:hseeco:126457 is not listed on IDEAS
  13. Liutang Gong & Heng-fu Zou, 2001. "Optimal taxation and intergovernmental transfer in a dynamic model with multiple levels of government," CEMA Working Papers 54, China Economics and Management Academy, Central University of Finance and Economics.
  14. Tao Zhang & Heng-fu Zou, 2000. "The growth impact of intersectoral and intergovernmental allocation of public expenditure: With applications to China and India," CEMA Working Papers 30, China Economics and Management Academy, Central University of Finance and Economics.
  15. Bird, Richard M., 1993. "Threading the Fiscal Labyrinth: Some Issues in Fiscal Decentralization," National Tax Journal, National Tax Association, vol. 46(2), pages 207-27, June.
  16. Raj M. Desai & Lev M. Freinkman & Itzhak Goldberg, 2003. "Fiscal federalism and regional growth : evidence from the Russian Federation in the 1990s," Policy Research Working Paper Series 3138, The World Bank.
  17. Iimi, Atsushi, 2005. "Decentralization and economic growth revisited: an empirical note," Journal of Urban Economics, Elsevier, vol. 57(3), pages 449-461, May.
  18. Devarajan, Shantayanan & Swaroop, Vinaya & Heng-fu, Zou, 1996. "The composition of public expenditure and economic growth," Journal of Monetary Economics, Elsevier, vol. 37(2-3), pages 313-344, April.
  19. Fidel Picos Sánchez, . "Modelo Dual De Irpf Y Equidad: Un Nuevo Enfoque Teórico Y Su Aplicación Al Caso Español," Working Papers 8-04 Classification-JEL :, Instituto de Estudios Fiscales.
  20. Jorge Martínez-Vázquez & Robert M. McNab, . "Fiscal Decentralization, Macrostability And Growth," Working Papers 11-03 Classification-JEL , Instituto de Estudios Fiscales.
  21. Ulrich Thießen, 2003. "Fiscal Decentralisation and Economic Growth in High-Income OECD Countries," Fiscal Studies, Institute for Fiscal Studies, vol. 24(3), pages 237-274, September.
  22. Danyang Xie & Heng-fu Zou & Hamid Davoodi, 1999. "Fiscal Decentralization and Economic Growth in the United States," CEMA Working Papers 109, China Economics and Management Academy, Central University of Finance and Economics.
  23. José María Arranz & Carlos García-Serrano, . "¿Qué Ha Sucedido Con La Estabilidad Del Empleo En España?. Un Análisis Desagregado Con Datos De La Epa: 1987-2003(*)," Working Papers 4-04 Classification-JEL :, Instituto de Estudios Fiscales.
  24. Zou Heng-fu, 1994. "Dynamic Effects of Federal Grants on Local Spending," Journal of Urban Economics, Elsevier, vol. 36(1), pages 98-115, July.
  25. Brueckner, Jan K, 1999. " Fiscal Federalism and Capital Accumulation," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 1(2), pages 205-24.
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