Liu, Y.——International Tax and Public Finance: Does Competition for Capital Discipline Governments? The Role of Fiscal Equalization
时间:2014-10-10
This paper examines how a fiscal equalization system affects the disciplining effect of competition for capital among heterogeneous regions in a decentralized economy. I build a model in which regions that are heterogeneous in initial endowments try to attract capital by competing public input that enhances the productivity of capital; meanwhile, a fiscal equalization system is imposed by the central government to reduce regional disparities in fiscal capacity. The key prediction, borne out in d