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oai:recercat.cat:2445/1167602025-11-19T20:44:32Zcom_2072_1057col_2072_478859col_2072_478917

How do local governments decide on public policy in fiscal federalism? Tax vs. expenditure optimization Koethenbuerger, Marco Federalisme Dret fiscal Administració local Federalism Tax law Local government Previous literature widely assumes that taxes are optimized in local públic finance while expenditures adjust residually. This paper endogenizes the choice of the optimization variable. In particular, it analyzes how federal policy toward local governments influences the way local governments decide on public policy. Unlike the presumption, the paper shows that local governments may choose to optimize over expenditures. The result most notably prevails when federal policy subsidizes local taxation. The results offer a new perspective of the efficiency implications of federal policy toward local governments and, thereby, enable a more precise characterization of local government behaviour in fiscal federalism. 2017-10-18T14:29:17Z 2017-10-18T14:29:17Z 2010 info:eu-repo/semantics/workingPaper https://hdl.handle.net/2445/116760 eng Reproducció del document publicat a: http://www.ieb.ub.edu/2012022157/ieb/ultimes-publicacions IEB Working Paper 2010/29 [WP E-IEB10/29] cc-by-nc-nd, (c) Koethenbuerger, 2010 http://creativecommons.org/licenses/by-nc-nd/3.0/es/ info:eu-repo/semantics/openAccess 22 p. application/pdf application/pdf Institut d’Economia de Barcelona IEB (Institut d’Economia de Barcelona) – Working Papers