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Growth incentives and devolved fiscal systems

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  • Katerina Lisenkova

Abstract

This paper explores the characteristics of a range of stylised devolved fiscal systems which have been applied, or proposed, as a means of funding the devolved Scottish Government. The central aim is to identify those fiscal mechanisms that most effectively incentivise the pursuit of growth promoting policies by the regional government. This implies identifying the extent to which different fiscal arrangements reinforce effective local growth policies by resulting in increased devolved budgets. Simulations using an inter-temporal, computable general equilibrium model for Scotland, fail to rank uniquely a range of devolved fiscal systems on this criterion over a range of demand- and supply-side policy interventions. Moreover, rather counter-intuitively, tax-sharing regimes do not necessarily improve growth incentives relative to more basic block grants.

Suggested Citation

  • Katerina Lisenkova, 2020. "Growth incentives and devolved fiscal systems," Working Papers 2009, University of Strathclyde Business School, Department of Economics.
    • Handle: RePEc:str:wpaper:2009
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    regional fiscal autonomy; regional fiscal systems; applied general equilibrium.;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

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