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The Break up of Nations: A Political Economy Analysis

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Author Info
Bolton, Patrick
Roland, Gérard

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Abstract

This paper analyses the tendency for nations to break up as a result of a trade-off between the aggregate efficiency losses from separation and the redistributive gains to the majority, which can occur in all regions, even when there are no transfers across these regions. We show that accommodating changes in fiscal policy in the unified nation may not always prevent separation, because differences in income distribution across regions mean some regions prefer more and some less redistribution; fiscal autonomy under a federal constitution may not necessarily prevent separation because of the effects of fiscal competition; linguistic imperialism in the provision of public goods may reduce the incentives to separate; perfect factor mobility eliminates the incentives to separate.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1225.

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Date of creation: Aug 1995
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Handle: RePEc:cpr:ceprdp:1225

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Related research
Keywords: Income Distribution; Median Voter; Political Integration; Separation;

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Find related papers by JEL classification:
H10 - Public Economics - - Structure and Scope of Government - - - General
H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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This page was last updated on 2009-10-29.

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