Vertical externalities with lump-sum taxeshow much difference does unemployment make?

  1. Martínez López, Diego
  2. Sjögren, Tomas
Journal:
Documents de treball IEB

Year of publication: 2012

Issue: 25

Type: Working paper

DIALNET GOOGLE SCHOLAR lock_openDialnet editor

Abstract

This paper analyses how the existence of unemployment affects the conventional approach to vertical externalities. We discuss the optimality rule for the provision of public inputs both in an unitary and a federal country. Our findings show that decentralizing the spending responsability on public inputs can bring its optimality rule closer to the production efficiency condition. Moreover, we describe the inability of the federal government, behaving as Stackelberg leader, to replicate the unitary outcome, unless to have new policy instruments at government�s disposal.

Data source: Dialnet