Fiscal Federalism, Grants, and the U.S. Fiscal Transformation in the 1930s

Publikation: Working paperForskning

Standard

Fiscal Federalism, Grants, and the U.S. Fiscal Transformation in the 1930s. / Gonzalez-Eiras, Martin; Niepelt, Dirk.

2017.

Publikation: Working paperForskning

Harvard

Gonzalez-Eiras, M & Niepelt, D 2017 'Fiscal Federalism, Grants, and the U.S. Fiscal Transformation in the 1930s'. <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3030705>

APA

Gonzalez-Eiras, M., & Niepelt, D. (2017). Fiscal Federalism, Grants, and the U.S. Fiscal Transformation in the 1930s. University of Copenhagen. Institute of Economics. Discussion Papers (Online) Nr. 17-18 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3030705

Vancouver

Gonzalez-Eiras M, Niepelt D. Fiscal Federalism, Grants, and the U.S. Fiscal Transformation in the 1930s. 2017 jul. 20.

Author

Gonzalez-Eiras, Martin ; Niepelt, Dirk. / Fiscal Federalism, Grants, and the U.S. Fiscal Transformation in the 1930s. 2017. (University of Copenhagen. Institute of Economics. Discussion Papers (Online); Nr. 17-18).

Bibtex

@techreport{c71fb1ea164546598525426bd142f400,
title = "Fiscal Federalism, Grants, and the U.S. Fiscal Transformation in the 1930s",
abstract = "We propose a theory of tax centralization and intergovernmental grants in politico-economic equilibrium. The cost of taxation differs across levels of government because voters internalize general equilibrium effects at the central but not at the local level. The equilibrium degree of tax centralization is determinate even if expenditure-related motives for centralization considered in the fiscal federalism literature are absent. If central and local spending are complements, intergovernmental grants are determinate as well. Our theory helps to explain the centralization of revenue, introduction of grants, and expansion of federal income taxation in the U.S. around the time of the New Deal. Quantitatively, the model can account for the postwar trend in federal grants, and a third of the dramatic increase in the size of the federal government in the 1930s.",
keywords = "Faculty of Social Sciences, Fiscal policy, Federalism, Politico-economic equilibrium, Markov equilibrium, Public goods, Grants, Political Economy, D72, E62, H41, H77",
author = "Martin Gonzalez-Eiras and Dirk Niepelt",
year = "2017",
month = jul,
day = "20",
language = "English",
series = "University of Copenhagen. Institute of Economics. Discussion Papers (Online)",
number = "17-18",
type = "WorkingPaper",

}

RIS

TY - UNPB

T1 - Fiscal Federalism, Grants, and the U.S. Fiscal Transformation in the 1930s

AU - Gonzalez-Eiras, Martin

AU - Niepelt, Dirk

PY - 2017/7/20

Y1 - 2017/7/20

N2 - We propose a theory of tax centralization and intergovernmental grants in politico-economic equilibrium. The cost of taxation differs across levels of government because voters internalize general equilibrium effects at the central but not at the local level. The equilibrium degree of tax centralization is determinate even if expenditure-related motives for centralization considered in the fiscal federalism literature are absent. If central and local spending are complements, intergovernmental grants are determinate as well. Our theory helps to explain the centralization of revenue, introduction of grants, and expansion of federal income taxation in the U.S. around the time of the New Deal. Quantitatively, the model can account for the postwar trend in federal grants, and a third of the dramatic increase in the size of the federal government in the 1930s.

AB - We propose a theory of tax centralization and intergovernmental grants in politico-economic equilibrium. The cost of taxation differs across levels of government because voters internalize general equilibrium effects at the central but not at the local level. The equilibrium degree of tax centralization is determinate even if expenditure-related motives for centralization considered in the fiscal federalism literature are absent. If central and local spending are complements, intergovernmental grants are determinate as well. Our theory helps to explain the centralization of revenue, introduction of grants, and expansion of federal income taxation in the U.S. around the time of the New Deal. Quantitatively, the model can account for the postwar trend in federal grants, and a third of the dramatic increase in the size of the federal government in the 1930s.

KW - Faculty of Social Sciences

KW - Fiscal policy

KW - Federalism

KW - Politico-economic equilibrium

KW - Markov equilibrium

KW - Public goods

KW - Grants

KW - Political Economy

KW - D72

KW - E62

KW - H41

KW - H77

M3 - Working paper

T3 - University of Copenhagen. Institute of Economics. Discussion Papers (Online)

BT - Fiscal Federalism, Grants, and the U.S. Fiscal Transformation in the 1930s

ER -

ID: 189361222