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dc.contributor.authorKoethenbuerger, Markoen_US
dc.date.accessioned2006-09-06en_US
dc.date.accessioned2009-07-28T08:12:17Z-
dc.date.available2009-07-28T08:12:17Z-
dc.date.issued2006en_US
dc.identifier.urihttp://hdl.handle.net/10419/25799-
dc.description.abstractThis paper analyzes whether changes in the timing of equalizing transfers to state governments necessitate an adjustment in federal corrective policy. According to the existing literature (assuming an ex-ante choice of transfers), the corrective grant is equal to the marginal damage/benefit inflicted by externality generation. When the federal government accommodates state finances ex-post, the grant differs in formula from existing prescription. Allocative federal policy corrects state policy incentives twofold. It entails a correction for the distortion in the marginal benefit of state spending (as in earlier literature) and for the distortion in the marginal cost of public funds induced by the ex-post provision of transfers. The required grant rule is generically disproportionate to the equilibrium externality (even with lump-sum taxation). Furthermore, the ex-post provision of transfers is critical for the nature of the equilibrium inefficiency. Equalizing transfers at least partly internalize consumption spill-overs, but simultaneously establishes a new source of inefficiency. As a final result, the existing prescription for allocative federal policy continues to apply if the public good is pure.en_US
dc.language.isoengen_US
dc.publisherCESifo Münchenen_US
dc.relation.ispartofseriesCESifo working paper 1754en_US
dc.subject.jelH7en_US
dc.subject.jelD62en_US
dc.subject.jelH3en_US
dc.subject.jelH1en_US
dc.subject.ddc330en_US
dc.titleEx-post redistribution in a federation: implications for corrective policyen_US
dc.typeWorking Paperen_US
dc.identifier.ppn517015234en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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