Efficient Revenue Sharing and Upper-Level Governments: Theory and Application to Germany
2011 | journal article. A publication with affiliation to the University of Göttingen.
Jump to: Cite & Linked | Documents & Media | Details | Version history
Documents & Media
Details
- Authors
- Buettner, Thiess; Schwager, Robert ; Hauptmeier, Sebastian
- Abstract
- This paper explores conditions under which revenue-sharing grants will achieve efficiency. We develop a general formulation of the state's decision problem of implementing a set of local policies. A theoretical analysis shows that if the state government pursues own policies and cannot levy lump-sum contributions from local jurisdictions, it will implement revenue-sharing grants that induce local governments to raise local tax rates. A subsequent empirical analysis of local tax policy in Germany suggests that attempts by state-level governments to extract fiscal resources from local governments result in higher tax rates at the local level. (JEL: H71, H77)
- Issue Date
- 2011
- Status
- published
- Publisher
- J C B Mohr
- Journal
- Journal of Institutional and Theoretical Economics
- ISSN
- 0932-4569