Reconsideration on issues regarding fiscal externality in a model where social preferences and reciprocal behaviors are incorporated

2014 Fiscal Year Final Research Report

• Project/Area Number: 23530356
• Research Category: Grant-in-Aid for Scientific Research (C)
• Allocation Type: Multi-year Fund
• Section: 一般
• Research Field: Public finance/Monetary economics
• Research Institution: Otaru University of Commerce
• Principal Investigator: SANO Hiroyuki 小樽商科大学, 商学部, 教授 (60301016)
• Project Period (FY): 2011-04-28 – 2015-03-31
• Keywords: 地域間競争 / 政府の目的 / 間接的進化アプローチ

Outline of Final Research Achievements

The purpose of this study is to investigate what type of preferences of a policy-maker in each jurisdictional government dominates as a long-run consequence in inter-jurisdictional competition with fiscal externality. To this end, I constructed a simple model of expenditure competition among jurisdictional governments adopting an indirect evolutionary approach.
I postulated that policy-maker's preferences are defined over a resident's welfare and a fiscal surplus that benefits only the policy-maker according to Edwards-Keen (1996) although the preference type is endogenously determined as an evolutionary equilibrium. I showed in my model that a purely benevolent policy-maker cannot survive in the long-run and the resident's welfare is lower than the one in a Nash equilibrium. However, this study has not been completed at the present time.

Free Research Field

公共経済学