Scandinavian Working Papers in Economics

Umeå Economic Studies,
Umeå University, Department of Economics

No 839: Decentralized Fiscal Federalism Revisited: Optimal Income Taxation and Public Goods under Horizontal Leadership

Thomas Aronsson () and Lars Persson ()
Additional contact information
Thomas Aronsson: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden
Lars Persson: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden

Abstract: This paper concerns optimal taxation and public goods in an economic federation with decentralized leadership, where one lower level government is first mover also in the horizontal dimension. Under plausible assumptions, horizontal leadership reinforces the incentives created by decentralized leadership.

Keywords: Optimal taxation; redistribution; public goods; fiscal federalism; decentralized leadership; horizontal leadership

JEL-codes: D31; D60; D82; H21

8 pages, February 23, 2012

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