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Inter-jurisdictional fiscal competition

Author

Listed:
  • Sergio Guimarães Ferreira
  • Ricardo Varsano
  • José Roberto Afonso

Abstract

This paper surveys the literature on fiscal competition. We consider tax and expenditure competition in a more general set up where different jurisdictions within a federation may compete in the provision of public goods in order to attract some residents (Tiebout (1956)) and expel others (Brueckner (1999); and/or for business. We address the vast literature on welfare gains or losses of these types of competition. Then, we discuss the empirical evidence, focusing on estimates of the sensitiveness of production factors to tax differentials and on the importance of the strategic interdependence among jurisdictions. We combine econometric studies with some case studies. Last we discuss the design of mechanisms to cope with fiscal competition, especially under a more global environment where factors become more mobile. JEL Classification: H77; H73; F2.

Suggested Citation

  • Sergio Guimarães Ferreira & Ricardo Varsano & José Roberto Afonso, 2005. "Inter-jurisdictional fiscal competition," Brazilian Journal of Political Economy, Center of Political Economy, vol. 25(3), pages 295-313.
    • Handle: RePEc:ekm:repojs:v:25:y:2005:i:3:p:295-313:id:644
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    File URL: https://centrodeeconomiapolitica.org.br/repojs/index.php/journal/article/view/644/641
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    Citations

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    Cited by:

    1. Kappeler, Andreas & Solé-Ollé, Albert & Stephan, Andreas & Välilä, Timo, 2013. "Does fiscal decentralization foster regional investment in productive infrastructure?," European Journal of Political Economy, Elsevier, vol. 31(C), pages 15-25.
    2. Raju Mainali, 2021. "Spatial Fiscal Interactions in Colombian Municipalities: Evidence from Oil Price Shocks," JRFM, MDPI, vol. 14(6), pages 1-15, June.
    3. Prakash Chandra Jha, 2015. "Theory of fiscal federalism: an analysis," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 17(2), pages 241-259, October.
    4. Henglong Zhang & Hao Wu, 2009. "Impact of fiscal transfer on fiscal effort of Chinese provincial governments," Frontiers of Economics in China, Springer;Higher Education Press, vol. 4(3), pages 406-424, September.
    5. Kappeler, Andreas & Solé-Ollé, Albert & Stephan, Andreas & Välilä, Timo, 2013. "Does fiscal decentralization foster regional investment in productive infrastructure?," European Journal of Political Economy, Elsevier, vol. 31(C), pages 15-25.
    6. Adriana Giurgiu, 2012. "Investment Incentives and the Global Competition for Capital – By K.P. Thomas," Journal of Common Market Studies, Wiley Blackwell, vol. 50(1), pages 190-190, January.

    More about this item

    Keywords

    Fiscal Federalism; Tax Differentials; Factor Mobility;
    All these keywords.

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • F2 - International Economics - - International Factor Movements and International Business

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