MONCARZ PEDRO ESTEBAN
Congresos y reuniones científicas
Título:
The effects of vertical fiscal transfers on the location of economic activity across a country regions: theory and evidence for Argentina
Autor/es:
MONCARZ, PEDRO ESTEBAN; FREILLE, SEBASTIAN; FIGUERAS, ALBERTO; CAPELLO, MARCELO
Lugar:
Buenos Aires
Reunión:
Congreso; XLV Reunión Anual de la AAEP; 2010
Institución organizadora:
Asociación Argentina de Economía Política
Resumen:
Argentina is constitutionally organised as a federal country, with both national and
state levels of government sharing tax and expenditure powers. For a long time now,
state governments have authorised the national government to raise taxes and to
distribute them among local governments according to some fixed criteria, including
the target of achieving a convergence in development and growth among sub-national
regions. Despite this compensatory aim, it is still possible to observe a great level of
asymmetries among the country provinces, asymmetries that in some cases have
even increased in recent times.
Extending Martin and Rogers? Footloose Capital Model to include the production of
non-tradable goods and public employment, we analyse the effect on the location of
economic activity that follows to changes on how vertical fiscal transfers from the
national to state governments are distributed. Our results show that an increase in the
share of transfers a region receives has a positive effect on the production of footloose
activities (i.e. manufactures) the higher are: i) transaction costs of goods produced
under increasing returns to scale; ii) the share of transfers that goes directly to
consumers instead of local governments; iii) the elasticity of substitution between
differentiated goods; and iv) the share of consumers? expenditure on manufactures
via-as-vis on non-traded goods.
state levels of government sharing tax and expenditure powers. For a long time now,
state governments have authorised the national government to raise taxes and to
distribute them among local governments according to some fixed criteria, including
the target of achieving a convergence in development and growth among sub-national
regions. Despite this compensatory aim, it is still possible to observe a great level of
asymmetries among the country provinces, asymmetries that in some cases have
even increased in recent times.
Extending Martin and Rogers? Footloose Capital Model to include the production of
non-tradable goods and public employment, we analyse the effect on the location of
economic activity that follows to changes on how vertical fiscal transfers from the
national to state governments are distributed. Our results show that an increase in the
share of transfers a region receives has a positive effect on the production of footloose
activities (i.e. manufactures) the higher are: i) transaction costs of goods produced
under increasing returns to scale; ii) the share of transfers that goes directly to
consumers instead of local governments; iii) the elasticity of substitution between
differentiated goods; and iv) the share of consumers? expenditure on manufactures
via-as-vis on non-traded goods.
