Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/248990 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 9445
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper studies the equilibrium effects of local fiscal autonomy accounting for benefits from self-determination. It proposes a quantifiable structural equilibrium framework in which imperfectly mobile heterogeneous households sort themselves across jurisdictions under endogenous public good provision. We calibrate the framework to fit the economic and geographic characteristics of the Canton of Bern using household-level data. In particular, we exploit quasi-natural policy variation in voting rights to quantify benefits from self-determination, and employ machine learning methods to accurately represent the local political process. We find that restricting local fiscal autonomy decreases welfare for (almost) all households.
Subjects: 
fiscal autonomy
self-determination
decentralization
household
equilibrium
quasi-natural variation
JEL: 
H71
H77
R51
Document Type: 
Working Paper
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