DP1829 Regional Redistribution and Stabilization by the Centre in Canada, France, the United Kingdom and the United States: New Estimates Based on Panel Data Econometrics

Author(s): Jacques Melitz, Frédéric Zumer
Publication Date: March 1998
Keyword(s): European Monetary Union, Fiscal Federalism, regional taxes and transfers
JEL(s): C23, E62, H87
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=1829

This paper produces estimates of regional redistribution and stabilization through the central government budget in Canada, France, the United Kingdom and the United States. The estimates rest on panel data econometrics and an adherence to certain accounting principles that have occasionally been violated in the past. As a result of the statistical method and the accounting, the peak estimates for Canada and the United States in the earlier literature are never attained. In addition, panel data econometrics yields estimates of stabilization which are entirely reasonable for France and the United Kingdom, whereas the estimates based on the previous literature are not so. Regional stabilization through the central government budget emerges as close to 20% in France, the United Kingdom and the United States, but only 10?14% in Canada.