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http://hdl.handle.net/10419/24666
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| Title: | | The Impact of Fiscal Equalization on Local Expenditure Policies: Theory and Evidence from Germany  |
| Authors: | | Hauptmeier, Sebastian |
| Issue Date: | | 2007 |
| Series/Report no.: | | ZEW Discussion Papers 07-081 |
| Abstract: | | This paper uses a simple model of fiscal competition in taxes and public inputs among local jurisdictions to analyze the incentive effects of fiscal equalization transfers. We find that a budget-compensated increase in the contribution rate to a system of fiscal equalization not only induces higher local tax rates (e.g., Koethenbuerger, 2002; Bucovetsky and Smart, 2006) but also lower budgetary shares of the public input to production. The subsequent empirical analysis is based on a rich data set of German municipalities and provides strong evidence for the existence of an incentive of fiscal equalization transfers on local expenditure policies. |
| Subjects: | | Fiscal competition Fiscal equalization Public inputs Regression discontinuity approach Germany |
| JEL: | | H77 H72 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Publikationen von Forscherinnen und Forschern des ZEW ZEW Discussion Papers
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| dp07081.pdf | | 314.63 kB | Adobe PDF |
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