Theory of Public Finance in a Federal State
The central question of this book is whether the assignment of government functions to the individual jurisdictions in a federal state can ensure an optimal allocation of resources and a fair income distribution. The analysis thereby gives a new answer to the old question about the optimal degree of fiscal decentralization in a federal state. It shows that fiscal decentralization is a method to disclose the preferences of currently living and future generations for local public goods, to limit the size of the government, and to avoid excessive public debt finance. While the allocative branch of the government benefits from fiscal decentralization, it is difficult to obtain a distribution of incomes that differs from the outcome that the market brings along.
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CHAPTER 2 Locational Efficiency and EfficiencySupporting Tax Systems
CHAPTER 3 Perfect Interregional Competition
CHAPTER 4 Interregional Tax Competition for Mobile Capital
CHAPTER 5 Optimal Structure of Local Governments
CHAPTER 6 Incentive Equivalence through Perfect Household Mobility
CHAPTER 7 Efficiency and the Degree of Household Mobility
CHAPTER 8 Decentralized Redistribution Policy
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adverse selection analysis assume assumption basic budget constraint capital tax rate Chapter consumption correct incentives crowding costs decisions derived efficient allocation equal factors of production federal finance first-order condition fiscal decentralization fixed factor gions head tax Hence household mobility households living identical regions immobile factors increase indifference curve individuals Inserting interregional tax competition interregional transfer jurisdictions labor land endowments land rents land taxes marginal costs maximize migration equilibrium migration responses mobile capital mobile firms mobile households mobile residents mobile workers moral hazard Nash equilibrium optimal allocation owners per-capita perfect competition problem production possibility frontier property tax Proposition public debt public factors redistribution policy regional governments regions choose result Samuelson condition Section small regions social social welfare function spillover effects symmetric equilibrium tax instrument set tax revenues taxation taxes on mobile tion transfer of resources transfer-constrained undistortive tax utility level variables Wellisch Wildasin