期刊名称：CORE Discussion Papers / Center for Operations Research and Econometrics (UCL), Louvain
出版年度：2001
卷号：2001
出版社：Center for Operations Research and Econometrics (UCL), Louvain
摘要：Problems of intergovernmental policy coordination can take many
forms and are becoming increasingly important with continuing economic
integration. In this paper we focus on the fiscal competition problem where
the non-cooperative choice of taxes and transfers among governments typi-
cally leads to suboptimal outcome. We look at the effect of two widely used
corrective policies: revenue sharing and expenditure sharing (or intergov-
ernmental matching grants). Our main result is that these two corrective
policies have opposite effects depending on the form of competition between
governments, namely whether governments compete in taxes or expendi-
tures. More precisely, for any form of competition, revenue sharing is desir-
able exactly when expenditure sharing is not and vice versa. The implication
is that the choice of the optimal corrective policy requires a complete under-
standing of the underlying non-cooperative behaviour among governments.
Our second main result is that neither revenue sharing or expenditure shar-
ing can be sustained as a Nash equilibrium among governments, although all
governments would benefit from one of these two corrective policies. Cen-
tral intervention is therefore inevitable unless governments can pre-commit
to the optimal corrective policy before setting their fiscal policies
