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A Computable General Equilibrium Model of Intergovernmental Aid

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Author Info
Thomas J. Nechyba

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Abstract

This paper introduces a computable general equilibrium model of intergovernmental relations in which heterogeneous agents (i) are endowed with income and houses, (ii) are fully mobile between multiple jurisdictions, and (iii) vote in both local and state elections to determine local property and state income tax rates. The model is calibrated to New Jersey micro tax data and used to study the general equilibrium effects of state government policies. Three different types of intergovernmental programs are analyzed: (i) redistributive revenue sharing, (ii) district power equalization and (iii) deductibility of local taxes. The approach facilitates a heretofore difficult comparative analysis in that it provides for an integrated investigation of these programs in a single general equilibrium model.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5420.

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Date of creation: Jan 1996
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Handle: RePEc:nbr:nberwo:5420

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H7 - Public Economics - - State and Local Government; Intergovernmental Relations

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Wildasin, David E., 1983. "The welfare effects of intergovernmental grants in an economy with independent jurisdictions," Journal of Urban Economics, Elsevier, vol. 13(2), pages 147-164, March. [Downloadable!] (restricted)
  2. Inman, Robert P. & Wolf, Douglas, 1976. "Sofa: A simulation program for predicting and evaluating the policy effects of grants-in-aid," Socio-Economic Planning Sciences, Elsevier, vol. 10(2), pages 77-88. [Downloadable!] (restricted)
  3. Epple, Dennis & Filimon, Radu & Romer, Thomas, 1993. "Existence of voting and housing equilibrium in a system of communities with property taxes," Regional Science and Urban Economics, Elsevier, vol. 23(5), pages 585-610, November. [Downloadable!] (restricted)
  4. Feldstein, Martin S & Metcalf, Gilbert E, 1987. "The Effect of Federal Tax Deductibility on State and Local Taxes and Spending," Journal of Political Economy, University of Chicago Press, vol. 95(4), pages 710-36, August. [Downloadable!] (restricted)
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  5. Fischel, William A., 1976. "An evaluation of proposals for metropolitan sharing of commercial and industrial property tax base," Journal of Urban Economics, Elsevier, vol. 3(3), pages 253-263, July. [Downloadable!] (restricted)
  6. Feldstein, Martin S, 1975. "Wealth Neutrality and Local Choice in Public Education," American Economic Review, American Economic Association, vol. 65(1), pages 75-89, March. [Downloadable!] (restricted)
  7. Douglas Holtz-Eakin & Harvey S. Rosen, 1990. "Federal Deductibility and Local Property Tax Rates," NBER Working Papers 2427, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Bucovetsky, Sam, 1982. "Inequality in the Local Public Sector," Journal of Political Economy, University of Chicago Press, vol. 90(1), pages 128-45, February. [Downloadable!] (restricted)
  9. Luger, Michael I., 1988. "Federal tax reform and the interjurisdictional mobility impulse," Journal of Urban Economics, Elsevier, vol. 23(2), pages 235-250, March. [Downloadable!] (restricted)
  10. Douglas Holtz-Eakin & Harvey S. Rosen, 1987. "Tax Deductibility and Municipal Budget Structure," NBER Working Papers 2224, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. Cassidy, Glenn & Epple, Dennis & Romer, Thomas, 1989. "Redistribution by local governments in a monocentric urban area," Regional Science and Urban Economics, Elsevier, vol. 19(3), pages 421-454, August. [Downloadable!] (restricted)
  12. Epple, Dennis & Romer, Thomas, 1991. "Mobility and Redistribution," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 828-58, August. [Downloadable!] (restricted)
  13. Zodrow, George, 1984. "The incidence of metropolitan property tax base sharing and rate equalization," Journal of Urban Economics, Elsevier, vol. 15(2), pages 210-229, March. [Downloadable!] (restricted)
  14. Zodrow, George R. & Mieszkowski, Peter, 1986. "Pigou, Tiebout, property taxation, and the underprovision of local public goods," Journal of Urban Economics, Elsevier, vol. 19(3), pages 356-370, May. [Downloadable!] (restricted)
  15. Romer, Thomas & Rosenthal, Howard & Munley, Vincent G., 1992. "Economic incentives and political institutions: Spending and voting in school budget referenda," Journal of Public Economics, Elsevier, vol. 49(1), pages 1-33, October. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Thomas J. Nechyba, 2006. "Alternative education finance strategies," Regional Economic Development, Federal Reserve Bank of St. Louis, issue Mar, pages 7-27. [Downloadable!]
  2. Raquel Fernandez & Richard Rogerson, 1999. "Equity and Resources: An Analysis of Education Finance Systems," NBER Working Papers 7111, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Thomas J. Nechyba, 2000. "Mobility, Targeting, and Private-School Vouchers," American Economic Review, American Economic Association, vol. 90(1), pages 130-146, March. [Downloadable!] (restricted)
  4. Raquel Fernandez, 2001. "Sorting, Education and Inequality," NBER Working Papers 8101, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Charles A. M. de Bartolome & Stephen L. Ross, 2002. "Equilibria with Local Governments and Commuting: Income Sorting vs. Income Mixing," Working papers 2002-01, University of Connecticut, Department of Economics, revised Mar 2003. [Downloadable!]
    Other versions:
  6. Caroline M. Hoxby, 1998. "All School Finance Equalizations Are Not Created Equal," NBER Working Papers 6792, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. Thomas J. Nechyba, 1996. "Public School Finance in a General Equilibrium Tiebout World: Equalization Programs, Peer Effects and Private School Vouchers," NBER Working Papers 5642, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Thomas J. Nechyba, 2001. "Centralization, Fiscal Federalism and Private School Attendance," NBER Working Papers 8355, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  9. Thomas J. Nechyba & Robert P. Strauss, 1997. "Community Choice and Local Public Services: A Discrete Choice Approach," NBER Working Papers 5966, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  10. Thomas Nechyba, 1996. "Fiscal federalism and local public finance: A computable general equilibrium (CGE) framework," International Tax and Public Finance, Springer, vol. 3(2), pages 215-231, May. [Downloadable!] (restricted)
  11. Fernández, Raquel, 2001. "Sorting, Education and Inequality," CEPR Discussion Papers 3020, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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