DP1142 Federal Fiscal Constitutions. Part II: Risk Sharing and Redistribution
|Author(s):||Torsten Persson, Guido Tabellini|
|Publication Date:||February 1995|
|Keyword(s):||Fiscal Federalism, Redistribution, Voting|
|Programme Areas:||International Macroeconomics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=1142|
The paper studies the political and economic determinants of inter-regional public transfers. It points to an important difference between two alternative federal fiscal constitutions. The paper shows that inter-regional transfers can be determined either by a federation-wide vote over a centralized social insurance system, or by bargaining over intergovernmental transfers. When regions are asymmetric, the federal social insurance system leads to a larger fiscal programme.