Economic Risk and Political Risk in Fiscal Unions
| Title: | Economic Risk and Political Risk in Fiscal Unions |
| Author: |
Perotti, Roberto; Alesina, Alberto
Note: Order does not necessarily reflect citation order of authors. |
| Citation: | Alesina, Alberto, and Roberto Perotti. 1998. Economic risk and political risk in fiscal unions. Economic Journal 108(449): 989-1008. |
| Full Text & Related Files: |
alesina_risk.pdf (428.4Kb; PDF) 
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| Abstract: | A fiscal programme that redistributes income from rich to poor individuals indirectly redistributes tax revenues from regions hit by a favourable shock to regions hit by an unfavourable one. Centralised fiscal redistribution has therefore been advocated as a way to insure individuals against region-specific shocks. In this paper, we argue that a centralised fiscal policy, while reducing the uncertainty on the tax base, may create additional uncertainty on the tax rate. Using a simple model we show that the higher uncertainty on the policy instrument might more than offset the lower uncertainty on the tax base. |
| Published Version: | doi:10.1111/1468-0297.00326 |
| Terms of Use: | This article is made available under the terms and conditions applicable to Other Posted Material, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#LAA |
| Citable link to this page: | http://nrs.harvard.edu/urn-3:HUL.InstRepos:4553022 |
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