Decentralized fiscal policy in an imperfectly competitive federal economy
UNSPECIFIED (1997) Decentralized fiscal policy in an imperfectly competitive federal economy. MANCHESTER SCHOOL OF ECONOMIC AND SOCIAL STUDIES, 65 (4). pp. 353-378. ISSN 0025-2034Full text not available from this repository.
In this paper we analyse the efficacy and desirability of decentralized fiscal policies, in a two-region federal economy, with monopolistic competition in local product markets, unionized local labour markets and a nationwide competitive sector. Local governments are utilitarian and use balanced-budget policies to provide public goods in their own region. They may also be subjected to constitutional limits to public spending, taking the form of cash planning. In this case, unilateral fiscal policies increase price and possibly wage mark-ups, yielding crowding out and employment losses in the other region. Uncoordinated local policies lead to overexpansion. The central government should intervene to encourage coordination.
|Item Type:||Journal Article|
|Subjects:||H Social Sciences > HC Economic History and Conditions|
|Journal or Publication Title:||MANCHESTER SCHOOL OF ECONOMIC AND SOCIAL STUDIES|
|Publisher:||BLACKWELL PUBL LTD|
|Number of Pages:||26|
|Page Range:||pp. 353-378|
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