Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/33821
Authors: 
Borck, Rainald
Caliendo, Marco
Steiner, Viktor
Year of Publication: 
2006
Series/Report no.: 
IZA Discussion Papers 2428
Abstract: 
In this paper, we consider fiscal competition between jurisdictions. Capital taxes are used to finance a public input and two public goods, one which benefits mobile skilled workers and one which benefits immobile unskilled workers. We derive the jurisdictions' reaction functions for different spending categories. We then estimate these reaction functions using data from German communities. Thereby we explicitly allow for a spatially lagged dependent variable and a possible spatial error dependence by applying a generalized spatial two-stage least squares (GS2SLS) procedure. The results show that there is significant interaction between spending of neighbouring counties in Germany.
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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