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Poverty traps with Local Allocation Tax grants in Japan

Author

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  • Takero Doi

    (Keio University)

Abstract

This paper investigates poverty traps with the Local Allocation Tax (LAT) grants in Japan. The LAT grants, which distributed to local governments by the central government, may be hesitated to make efforts for enhancing regional economic growth, due to the calculation of the LAT grants. We show that the LAT grants give a disincentive to increase their estimated tax revenue and lower regional income by a simple dynamic model. Based on implication of our model, the panel Granger (non-)causality tests are implemented. We find that there are poverty traps due to the LAT grants in Japan.

Suggested Citation

  • Takero Doi, 2010. "Poverty traps with Local Allocation Tax grants in Japan," Keio/Kyoto Joint Global COE Discussion Paper Series 2010-002, Keio/Kyoto Joint Global COE Program.
    • Handle: RePEc:kei:dpaper:2010-002
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    File URL: https://ies.keio.ac.jp/old_project/old/gcoe-econbus/pdf/dp/DP2010-002.pdf
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    References listed on IDEAS

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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. 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).
    3. 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.
    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

    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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