Inter-temporal fiscal equalization and per capita output in a federation
We develop a model of a federation with two heterogeneous states which participate in an Australian-style inter-temporal revenue sharing-equalization scheme that redistributes income from rich to poor states. We then consider a policy shock requiring the states to make the transition to a steady...
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| Format: | Working Paper |
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Curtin University
2016
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| Online Access: | http://www.curtin.edu.au/research/crae/publications/working-paper-series/index.cfm http://hdl.handle.net/20.500.11937/36722 |
| _version_ | 1848754849367195648 |
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| author | Chan, Felix Petchey, Jeffrey |
| author_facet | Chan, Felix Petchey, Jeffrey |
| author_sort | Chan, Felix |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | We develop a model of a federation with two heterogeneous states which participate in an Australian-style inter-temporal revenue sharing-equalization scheme that redistributes income from rich to poor states. We then consider a policy shock requiring the states to make the transition to a steady state with a higher capital to effective labour ratio. It is shown that equalization induces the states to delay convergence, resulting in unambiguously smaller per capita output over time in each state, including the poor state receiving a net transfer. The paper also provides the foundation for further theoretical and empirical research. |
| first_indexed | 2025-11-14T08:46:57Z |
| format | Working Paper |
| id | curtin-20.500.11937-36722 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T08:46:57Z |
| publishDate | 2016 |
| publisher | Curtin University |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-367222017-01-30T13:57:17Z Inter-temporal fiscal equalization and per capita output in a federation Chan, Felix Petchey, Jeffrey local public goods inter-governmental relations fiscal equalization federalism capital regional redistribution interjurisdictional differentials and their effects We develop a model of a federation with two heterogeneous states which participate in an Australian-style inter-temporal revenue sharing-equalization scheme that redistributes income from rich to poor states. We then consider a policy shock requiring the states to make the transition to a steady state with a higher capital to effective labour ratio. It is shown that equalization induces the states to delay convergence, resulting in unambiguously smaller per capita output over time in each state, including the poor state receiving a net transfer. The paper also provides the foundation for further theoretical and empirical research. 2016 Working Paper http://hdl.handle.net/20.500.11937/36722 http://www.curtin.edu.au/research/crae/publications/working-paper-series/index.cfm Curtin University fulltext |
| spellingShingle | local public goods inter-governmental relations fiscal equalization federalism capital regional redistribution interjurisdictional differentials and their effects Chan, Felix Petchey, Jeffrey Inter-temporal fiscal equalization and per capita output in a federation |
| title | Inter-temporal fiscal equalization and per capita output in a federation |
| title_full | Inter-temporal fiscal equalization and per capita output in a federation |
| title_fullStr | Inter-temporal fiscal equalization and per capita output in a federation |
| title_full_unstemmed | Inter-temporal fiscal equalization and per capita output in a federation |
| title_short | Inter-temporal fiscal equalization and per capita output in a federation |
| title_sort | inter-temporal fiscal equalization and per capita output in a federation |
| topic | local public goods inter-governmental relations fiscal equalization federalism capital regional redistribution interjurisdictional differentials and their effects |
| url | http://www.curtin.edu.au/research/crae/publications/working-paper-series/index.cfm http://hdl.handle.net/20.500.11937/36722 |