Recent global initiatives on debt relief and development assistance call for increasing aid for trade to the poorest countries. We apply a multi-country computable general equilibrium model, to analyze if aid for trade offers the possibility that, instead of the developing and least developed countries’ being worse off—as so many were as the result of the last round of trade negotiations—they w...

Germany is in a dilemma. Low wage competition via product and factor markets increases the demands on the welfare state, but increased systems competition in the context of international factor mobility reduces the possibilities of maintaining it. The welfare state has important allocative functions. It is an insurance against career risks and it stimulates risk taking and economic growth. Howe...

In this paper, we analyse how the prospect of international negotiations over transboundary pollution shapes intra-country transfer schemes when the governments of the countries’polluting regions are in charge of environmental policy and negotiations. Federal governments can implement compensation payments between domestic regions and matching grants prior to the international negotiations betw...

A theoretical analysis considers the impact of a typical system of redistributive “fiscal equalization” transfers on the taxing effort of local jurisdictions. More specifically, it shows that the marginal contribution rate, i.e. the rate at which an increase in the tax base reduces those transfers, might be positively associated with the local tax rate while the volume of grants received is lik...

In a common market with costless mobility of all factors, regional governments can attract mobile rms by granting subsidies which must be nanced out of wage taxes on mobile labour. Since rms locate where subsidies are highest and workers settle where taxes are lowest, government are forced "in the splits" (double Bertrand-type tax competition). We assume that without government intervention the...

Inter-municipal cooperation is an important public service delivery reform, whose drivers move beyond simple concerns with costs and economic efficiency, to policy issues related to governance structure and spatial context. We conduct a metaregression analysis based on the existing multivariate empirical literature to explore what factors explain divergence in results in the existing empirical ...

School education in Germany is under the responsibility of the federal states and as a consequence average grades differ widely across regions. Since school leavers apply nationwide for admission to university, regional provenance may thus matter a lot for the success probability in the admission process. Using a comprehensive dataset of the German central clearing house for university admissio...

We analyze the relationship between senate malapportionment and the allocation of the US federal budget to the states during the period 1978-2002. A substantial literature originating from the influential paper by Atlas et al. (1995) finds that small and overrepresented states get significantly larger shares of federal funds. We show that these studies suffer from fundamental identification pro...

This paper presents a model of nation formation in which culturally heterogeneous agents vote on the optimal level of public spending. Larger nations beneÞt from increasing returns in the provision of public goods, but bear the costs of greater cultural heterogeneity. This tradeoff induces agents’ preferences over different geographical conÞgurations, thus determining the likelihood of secessio...

The economics of federalism is a broad discipline with more than five decades of experience. It may shed light on how regulatory jurisdiction is allocated in EU electricity and telecommunications markets. Specifically, this paper assesses the evolution of reform up to and including the third EU packages, which continue the liberalization and integration process in these markets. Liberalization ...