Vertical externalities with lump-sum taxes:: how much difference does unemployment make?

• Autores: Diego Martínez López, Tomas Sjögren
• Localización: XX Encuentro Economía Pública: estado del bienestar. Sostenibilidad y reformas, 2013, ISBN 978-84-695-6945-0, pág. 65
• Idioma: inglés
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• Resumen

  • This paper analyses how the existence of unemployment a§ects the conventional ap- proach to vertical externalities. We discuss the optimality rule for the provision of public inputs both in an unitary and a federal country. Our Öndings show that decentralizing the spending responsability on public inputs can bring its optimality rule closer to the production e¢ ciency condition. Moreover, we describe the inability of the federal gov- ernment, behaving as Stackelberg leader, to replicate the unitary outcome, unless to have new policy instruments at governmentís disposal