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IEB12-25_Martinez+Sjogren.pdf (491.66 KB)

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Working paper

Publication date

2012

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cc-by-nc-nd, (c) Martinez, 2012
Please use this identifier to cite or link to this item: https://hdl.handle.net/2445/116329

Vertical externalities with lump-sum taxes: how much difference does unemployment make?

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Abstract

This paper analyses how the existence of unemployment affects the conventional approach to vertical externalities. We discuss the optimality rule for the provision of public inputs both in an unitary and a federal country. Our findings show that decentralizing the spending responsability on public inputs can bring its optimality rule closer to the production efficiency condition. Moreover, we describe the inability of the federal government, behaving as Stackelberg leader, to replicate the unitary outcome, unless to have new policy instruments at government’s disposal.

Subject

Impostos, Atur, Externalitats (Economia)

Subject (English)

Taxation, Unemployment, Externalities (Economics)

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

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MARTÍNEZ LÓPEZ, Diego and SJÖGREN, Tomas. Vertical externalities with lump-sum taxes: how much difference does unemployment make?. IEB Working Paper 2012/25. [consulted: 14 of August of 2026]. Available at: https://hdl.handle.net/2445/116329

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