Citation

Discussion Paper Details

Please find the details for DP2627 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Personal Redistribution and the Regional Allocation of Public Investment

Author(s): Ramon Caminal

Publication Date: November 2000

Keyword(s): Public Investment, Redistribution and Regional Policy

Programme Area(s): Public Economics

Abstract: Should the geographic allocation of public investment aim at reducing regional inequalities or should it exclusively be concerned with the maximization of aggregate output? In this Paper I study the potential role of public investment in reducing personal welfare inequality, in combination with distortionary taxation. The case for public investment as a significant redistribution device seems weak. If the tax code is constrained to be uniform across regions then it is optimal to distort the allocation of public investment in favour of the poor regions, but only to a limited extent. The reason is that poor individuals are relatively more sensitive to public transfers, which are maximized by allocating public investment efficiently. If the tax code can vary across regions then the result is ambiguous and it might even be the case that the optimal policy involves an allocation of public investment distorted in favour of the rich regions.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2627

Bibliographic Reference

Caminal, R. 2000. 'Personal Redistribution and the Regional Allocation of Public Investment'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2627