The structure of political power and redistribution in economies with multiple governments
Keywords:distribution, efficiency, federalism, elections
For economies with multiple governments, the effort and effectiveness of public redistribution policies depend on the political structure of the federation. The central government determines the degree of re distribution and the interaction between the preferences and wages of voters controlling, respectively, the central and sub-national governments determine whether income redistribution can be an effective tool to redistribute welfare. In this paper, we identify conditions in which the interaction between the central government and subnational governments lead to a Pareto superior allocation in the redistribution of income
Alt, J. and E. R. C. Lowry. 2000. A Dynamic Model of State Budget Outcomes Under Divided Partisan Government, Journal of Politics, 62: 1035-1069.
Aronsson, T. L. Andersson, and M. Wikström. 2004. Testing for Vertical Fiscal Externalities, International Tax and Public Finance, 11: 243-263.
Aronsson T., and S. Blomquist. 2008. Redistribution and Provision of Public Goods in an Economic Federation, Journal of Public Economic Theory, 10: 125-143.
Besley, T., and S. Coate. 2003, Centralized versus Decentralized Provision of Local Public Goods: A Political Economy Approach, Journal of Public Economics, 87: 2611-2637.
Boadway, R., and M. Keen. 1996. Efficiency and the Optimal Direction for Federal-State Transfers, International Tax and Public Finance, 3: 137-155.
Boadway, R., M. Marchand, and M. Vigneault. 1998. The Consequences of Overlapping Tax Bases for Redistribution and Public Spending in a Federation, Journal of Public Economics, 68: 453-478.
Bolton, P. and G. Roland. 1997. The Breakup of Nations: A Political Economy Analysis, The Quarterly Journal of Economics, 112: 1057-1090.
Caplan, B. 2001. Has Leviathan being bound? A Theory of Imperfectly Constrained With Evidence from the States, Southern Economic Journal, 67: 825-847.
Caplan, A. J., R. C. Cornes, and E. C. D. Silva. 2000. Pure Public Goods and Income Redistribution in a Federation with Decentralized Leadership and Imperfect Mobility, Journal of Public Economics, 77: 265-284.
Chernick, H. 2005. On the Determinants of Subnational Tax Progressivity in the U.S., National Tax Journal, 58: 93-112.
Dahlby, B. 1996. Fiscal Externalities and the Design of Intergovernmental Transfers, International Tax and Public Finance, 3: 397-412.
Dahlby, B., and L. S. Wilson. 2003. Vertical Fiscal Externalities in a Federation, Journal of Public Economics, 87: 917-930.
Fletcher, J. M. and M. M. Murray. 2008. What Factors Influence the Structure of the State Income Tax? Public Finance Review, 36: 475-496.
Gong, L. and H. F. Zou. 2002. Optimal Taxation and Intergovernmental Transfer in a Dynamic Model with Multiple Levels of Government, Journal of Economic Dynamics and Control, 26: 1975-2003.
Johnson, W. R. 1988. Income Redistribution in a Federal System, American Economic Review, 7: 570-573.
Keen, M. 1997. Vertical Tax Externalities in the Theory of Fiscal Federalism, International Monetary Fund, WP/97/173, 1-35.
Kochi, I., and R. A. Ponce-Rodríguez. 2013. Political competition and the (In)Effectiveness of Redistribution in a Federation, International Journal of Economics and Finance, 5: 75-86.
Lockwood, B. 2002. Distributive Politics and the Costs of Centralization, The Review of Economic Studies, 69: 313-337.
Ortuño-Ortin, I. and J. Sempere. 2006. A Theoretical Model of Nations, Regions and Fiscal Integration, Regional Science and Urban Economics, 36: 132-157.
Ponce Rodriguez, R. A. 2010. Competencia política y las finanzas públicas de los gobiernos estatales y locales, México, Universidad Autónoma de Ciudad Juárez.
Reed, W. R. 2006. Democrats, Republicans and Taxes: Evidence that Political Parties Matters, Journal of Public Economics, 90: 725-750.
Rizzo, L. 2008. Local Government Responsiveness to Federal Transfers: Theory and Evidence, International Tax and Public Finance, 15: 316-337.
Roemer, J. E. 1997. Political-Economic Equilibrium when Parties Represent Constituents: the Unidimensional Case, Social Choice and Welfare, 14: 479-502.
Roemer, J. E. 2001. Political Competition Theory and Applications, Cambridge, Harvard University Press.
Rogers, D. L., and J. H. Rogers. 2000. Political Competition and State Government Size: Do Tighter Elections Produce Looser Budgets? Public Choice, 105: 1-21.
Ter-Minassian, T. 1997. Fiscal Federalism in Theory and Practice, Washington, International Monetary Fund.
Wildasin, D. 1991. Income Redistribution in a Common Labor Market, American Economic Review, 81: 757774.
Wilson, J. D. 1999. Theories of Tax Competition, National Tax Journal, 52: 269-304.
Wittman, D. A. 1973. Parties as Utility Maximizers, American Political Science Review, 67: 490-498.
Wittman, D. A. 1983. Candidate Motivation: A Synthesis of Alternative Theories, The American Political Science Review, 77: 142-157.