Inter-state transfers for cost differences in federations with population mobility and natural resources
The Australian system of horizontal scal equalization (HFE) transfers output from low to high cost states. This paper develops a standard model of a federation with an imperfectly mobile population and states which capture economic rents from natural resources and recycle the revenue on the basis...
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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/20.500.11937/40754 |
| _version_ | 1848755955995508736 |
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| author | Petchey, Jeffrey |
| author_facet | Petchey, Jeffrey |
| author_sort | Petchey, Jeffrey |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | The Australian system of horizontal scal equalization (HFE) transfers output from low to high cost states. This paper develops a standard model of a federation with an imperfectly mobile population and states which capture economic rents from natural resources and recycle the revenue on the basis of residency. A federal agency, which can be thought of as mimicking the role of the Commonwealth Grants Commission, chooses an inter-state transfer to maximize national social welfare. The contribution of the paper is to show that under the assumptions of the model, the optimal transfer to a state is increasing in its costs, for given costs in other states. This supports the notion of inter-state transfers in favour of high cost states. However, the result does not necessarily validate the magnitude of transfers that we see in practice in the Australian federation. |
| first_indexed | 2025-11-14T09:04:32Z |
| format | Working Paper |
| id | curtin-20.500.11937-40754 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T09:04:32Z |
| publishDate | 2016 |
| publisher | Curtin University |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-407542017-01-30T14:45:29Z Inter-state transfers for cost differences in federations with population mobility and natural resources Petchey, Jeffrey inter-governmental differentials and - their effects federal state relations intergovernmental relations federalism The Australian system of horizontal scal equalization (HFE) transfers output from low to high cost states. This paper develops a standard model of a federation with an imperfectly mobile population and states which capture economic rents from natural resources and recycle the revenue on the basis of residency. A federal agency, which can be thought of as mimicking the role of the Commonwealth Grants Commission, chooses an inter-state transfer to maximize national social welfare. The contribution of the paper is to show that under the assumptions of the model, the optimal transfer to a state is increasing in its costs, for given costs in other states. This supports the notion of inter-state transfers in favour of high cost states. However, the result does not necessarily validate the magnitude of transfers that we see in practice in the Australian federation. 2016 Working Paper http://hdl.handle.net/20.500.11937/40754 http://www.curtin.edu.au/research/crae/publications/working-paper-series/index.cfm Curtin University fulltext |
| spellingShingle | inter-governmental differentials and - their effects federal state relations intergovernmental relations federalism Petchey, Jeffrey Inter-state transfers for cost differences in federations with population mobility and natural resources |
| title | Inter-state transfers for cost differences in federations with population mobility and natural resources |
| title_full | Inter-state transfers for cost differences in federations with population mobility and natural resources |
| title_fullStr | Inter-state transfers for cost differences in federations with population mobility and natural resources |
| title_full_unstemmed | Inter-state transfers for cost differences in federations with population mobility and natural resources |
| title_short | Inter-state transfers for cost differences in federations with population mobility and natural resources |
| title_sort | inter-state transfers for cost differences in federations with population mobility and natural resources |
| topic | inter-governmental differentials and - their effects federal state relations intergovernmental relations federalism |
| url | http://www.curtin.edu.au/research/crae/publications/working-paper-series/index.cfm http://hdl.handle.net/20.500.11937/40754 |