We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
Fiscal Reconstruction and Local Government Financing.
- Authors
Ihori, Toshihiro; Itaya, Jun-Ichi
- Abstract
This paper investigates the dynamic properties of intergovernmental financing during a fiscal reconstruction process by analyzing the dynamic game among local governments, which operates with soft budget constraints because of concessionary region-specific transfers from a central government. The existence of intergovernmental transfers induces the free-riding behavior of local governments, thereby bringing considerable deficits to the central government. Raising local and/or national taxes is desirable for fiscal reconstruction, but is unable to attain the Pareto-efficient fiscal reconstruction. Taxes on lobbying activities, combined with uniform transfers, induce earlier concession and can attain the Pareto-efficient outcome in the long run.
- Subjects
FISCAL policy; LOCAL government; FEDERAL government; ECONOMIC efficiency; BUDGET; BEHAVIORAL economics
- Publication
International Tax & Public Finance, 2004, Vol 11, Issue 1, p55
- ISSN
0927-5940
- Publication type
Article
- DOI
10.1023/B:ITAX.0000004777.75405.8c