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The Effects of Interpersonal Fiscal Redistribution on Provincial Growth and Convergence in Spain

Author

Listed:
  • Jose Villaverde

    (Universidad de Cantabria)

  • Adolfo Maza

    (Universidad de Cantabria)

  • María Hierro

    (Universidad de Cantabria)

Abstract

This paper analyzes the effects of interpersonal fiscal redistribution on provincial growth and convergence in Spain over 2000-2010. After reviewing the literature and stressing the ambiguity of its conclusions, the paper offers an overview of the main characteristics of the interpersonal fiscal flows distribution. Next, it specifies a convergence model in which interpersonal fiscal flows are used as a key independent variable. Before further proceeding, the paper applies a filtering technique to remove spatial autocorrelation from raw data and, then, it estimates the model by GMM. The main conclusion is that interpersonal fiscal flows are an important policy instrument to promote both growth and, above all, convergence across Spanish provinces. Therefore, it seems that the typical trade-off between efficiency and equity does not hold in this case.

Suggested Citation

  • Jose Villaverde & Adolfo Maza & María Hierro, 2014. "The Effects of Interpersonal Fiscal Redistribution on Provincial Growth and Convergence in Spain," Hacienda Pública Española / Review of Public Economics, IEF, vol. 209(2), pages 151-170, June.
    • Handle: RePEc:hpe:journl:y:2014:v:209:i:2:p:151-170
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Interpersonal fiscal flows; convergence; growth; Spanish provinces;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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