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Poverty Traps With Local Allocation Tax Grants In Japan

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Abstract

This essay investigates poverty traps related to Local Allocation Tax (LAT) grants in Japan. LAT grants, which are transfers of funds from the central government to local governments, make efforts for enhancing regional economic growth, due to the calculation of the LAT grants. Using a simple dynamic model, we show that LAT grants lower regional income and are a disincentive to localities to increase their estimated tax revenue. Using panel Granger (non-)causality tests, we find empirical support for asserting that there are poverty traps due to the LAT grants in Japan.

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  • Takero Doi, 2010. "Poverty Traps With Local Allocation Tax Grants In Japan," The Japanese Economic Review, Japanese Economic Association, vol. 61(4), pages 466-487, December.
    • Handle: RePEc:bla:jecrev:v:61:y:2010:i:4:p:466-487
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    File URL: http://hdl.handle.net/10.1111/j.1468-5876.2010.00519.x
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    Cited by:

    1. Amitrajeet A. Batabyal & Hamid Beladi, 2014. "Innovation Driven Economic Growth in Multiple Regions and Taxation," International Regional Science Review, , vol. 37(4), pages 459-472, October.
    2. Raphael Fischer & Gunther Schnabl, 2018. "Regional heterogeneity, the rise of public debt and monetary policy in post-bubble Japan: lessons for the EMU," International Economics and Economic Policy, Springer, vol. 15(2), pages 405-428, April.
    3. Miyazaki, Takeshi, 2020. "Intergovernmental fiscal transfers and tax efforts: Regression-discontinuity analysis for Japanese local governments," Regional Science and Urban Economics, Elsevier, vol. 84(C).
    4. Miyazaki, Takeshi, 2016. "Intergovernmental Fiscal Transfers and Tax Efforts: Evidence from Japan," MPRA Paper 74337, University Library of Munich, Germany.

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    More about this item

    Keywords

    H77 ; O43 ; R11 ;
    All these keywords.

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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