Working Paper: CEPR ID: DP1829
Authors: Jacques Melitz; Frederic Zumer
Abstract: This paper produces estimates of regional redistribution and stabilization through the central government budget in Canada, France, the United Kingdom and the United States. The estimates rest on panel data econometrics and an adherence to certain accounting principles that have occasionally been violated in the past. As a result of the statistical method and the accounting, the peak estimates for Canada and the United States in the earlier literature are never attained. In addition, panel data econometrics yields estimates of stabilization which are entirely reasonable for France and the United Kingdom, whereas the estimates based on the previous literature are not so. Regional stabilization through the central government budget emerges as close to 20% in France, the United Kingdom and the United States, but only 10?14% in Canada.
Keywords: fiscal federalism; regional taxes and transfers; european monetary union
JEL Codes: C23; E62; H87
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Regional stabilization through the central government budget (E63) | Stabilization rate in France, UK, and US (N14) |
| Regional stabilization through the central government budget (E63) | Stabilization rate in Canada (N12) |
| Net transfers from the center (F16) | Reduction in regional income dispersion in France (R12) |
| Net transfers from the center (F16) | Reduction in regional income dispersion in the UK (R12) |
| Net transfers from the center (F16) | Reduction in regional income dispersion in Canada (O51) |
| Net transfers from the center (F16) | Reduction in regional income dispersion in the US (R11) |
| Switching from income accounting to gross product accounting (E01) | Redistribution estimate in Canada (D39) |
| Switching from income accounting to gross product accounting (E01) | Stabilization estimate in Canada (N12) |
| Switching from income accounting to gross product accounting (E01) | Redistribution estimate in the US (D39) |
| Switching from income accounting to gross product accounting (E01) | Stabilization estimate in the US (E63) |