Scandinavian Working Papers in Economics

Working Paper Series, Center for Fiscal Studies,
Uppsala University, Department of Economics

No 2012:12: Public Goods in a Voluntary Federal Union: Implications of a Participation Constraint

Thomas Aronsson (), Luca Micheletto () and Tomas Sjögren ()
Additional contact information
Thomas Aronsson: Department of Economics, Postal: Umeå School of Business and Economics, Umeå University, SE - 901 87, Umeå,, Sweden
Luca Micheletto: Uppsala Center for Fiscal Studies, Postal: Department of Economics, Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Tomas Sjögren: Department of Economics, Postal: Umeå School of Business and Economics, Umeå University, SE - 901 87 Umeå,, Sweden

Abstract: This paper re-examines the question of whether federal ex-post redistribution in terms of public funds leads to under-provision of public goods by adding the assumption that the member states are free to leave the economic federation. We show that federal ex-post redistribution leads to e¢ cient provision of local and federal public goods under certain conditions.

Keywords: Public goods; …scal federalism; ex-post redistribution

JEL-codes: D61; H41; H77

7 pages, November 13, 2012

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