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Seminario IECON: "Tax Decentralization Notwithstanding Regional Disparities"

Presenta Martín Besfamille (Pontificia Universidad Católica de Chile)
"Tax Decentralization Notwithstanding Regional Disparities" (en co-autoría con A.A. Bellofatto, University of Queensland)

Abstract

In assessing the desirability for decentralization reforms, a dilemma between efficiency and redistribution commonly emerges. On the one hand, by limiting the ability of the central government to redistribute resources towards regions in financial needs, decentralization curbs incentives for excessive subnational spending and enhances fiscal discipline. On the other hand, by triggering tax competition for mobile tax bases, decentralized systems may widen interregional disparities. In this paper, we provide a formal treatment of this trade-off balancing equity and efficiency and, through those lenses, we shed light on the optimal degree of fiscal decentralization. Our main result is that fiscal decentralization can be optimal even under Rawlsian social preferences which only weight the welfare of the poorest region in the federation.


Martes 18/9/2018
12 hs, Salón Multifuncional
Facultad de Ciencias Económicas y de Administración
 
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