Economic integration and fiscal devolution

• 成果类型: Article; Proceedings Paper
• 署名作者: Leite-Monteiro, M; Sato, M
• 署名单位: Universidade Catolica Portuguesa; Hitotsubashi University
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/S0047-2727(02)00052-X
• 发表日期: 2003
• 页码: 2507-2525
• 关键词: integration; SEPARATION; Tax competition; decentralization

摘要

In this paper we investigate how economic integration influences the political decision of integration and separation of jurisdictions. In a model with (imperfect) capital mobility, we consider that, not only the redistributive policy itself, but also the level of policy centralization is decided by a majority vote. We find that the net benefit from integration is not monotonic with the level of world capital market integration and present a case where integration of two regions occurs only for intermediate levels of mobility. This conclusion relies on the comparison of the regional majorities' utility under the various regimes. The benefits from integration arise from the elimination of tax competition across jurisdictions, which allows for more income redistribution, whereas the costs are linked to the diversity of preferences across regions, namely that of the decisive voters. We also show that a federal regime is better than complete centralization in keeping a nation united. (C) 2002 Elsevier B.V. All rights reserved.