Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/75514 
Authors: 
Year of Publication: 
1999
Series/Report no.: 
CESifo Working Paper No. 207
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Compared with the traditional public-finance approach of a monolithic fully informed planner, earmarking of taxation is less likely to be optimal if a principal-agent setting is considered, where taxing and spending are performed by two separate agents which are monitored by the parliament. We assume that the parliament either maximizes welfare or expected votes. Vote maximizers are more inclined to choose earmarking, but at the price of inefficiently high costs.
Subjects: 
Earmarking
efficient taxation
asymmetric information
Document Type: 
Working Paper
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