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IEB10-50_Revelli.pdf (743.88 KB)

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Working paper

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2010

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cc-by-nc-nd, (c) Revelli, 2010
Please use this identifier to cite or link to this item: https://hdl.handle.net/2445/116905

Tax mix corners and other kinks

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Abstract

This paper models the local tax mix determination process in the presence of state-wide tax limitations and shows how excess sensitivity of local public spending to grants (the conventionally and somewhat misleadingly called flypaper effect) arises in the endogenously generated constrained tax mix and cannot in general be taken as a symptom of local government overspending. By means of a panel data switching regression approach that allows for fixed effects and endogenous selection, the paper exploits the clustering of Italian Provinces at the corners produced by upper and lower tax limitations, and provides evidence of considerable cap-generated excess sensitivity.

Subject

Administració fiscal, Administració local, Anàlisi de dades de panel

Subject (English)

Tax administration and procedure, Local government, Panel analysis

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IEB (Institut d’Economia de Barcelona) – Working Papers

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REVELLI, Federico. Tax mix corners and other kinks. IEB Working Paper 2010/50. [consulted: 9 of June of 2026]. Available at: https://hdl.handle.net/2445/116905

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