Departmental Bulletin Paper Fiscal Disparities, Yardstick Competition, and the Welfare Effects of Fiscal Equalization Transfer

Nishigaki, Yasuyuki  ,  Higashi, Yuzo  ,  Nishimoto, Hideki

(45)  , pp.1 - 11 , 2015-05-00 , 龍谷大学社会科学研究所
Fiscal disparities such as differences of revenue among localities bias the equilibrium of a yardstick competition and decrease effectiveness in intergovernmental competition. By utilizing a yardstick competition model with a special focus on the consumption choice of residents, this paper examines welfare effects of fiscal equalization transfer. Rent taking behavior of a governor in a relatively endowed jurisdiction and welfare improvement effects by equalization transfer are examined. Furthermore, a win=win relationship between a donating and a recipient jurisdiction is indicated.

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