Optimal Federalism
Sorting the Functions of Government within the Fiscal Hierarchy
Abstract
Chapter 26 considers how to assign the various allocational and distributional functions of government to the different levels of government within the federalist hierarchy to avoid potential incompatibilities and destructive competition among the governments. It highlights George Stigler's prescription for assigning allocational functions to the lowest level of government consistent with efficiency, and argues that all levels of government have to participate in resolving the issue of the optimal distribution of income to maintain an unambiguous meaning of social welfare maximization under federalism.
Keywords
Competition problem; Federalism; Oates' ...Get Public Finance, 3rd Edition now with the O’Reilly learning platform.
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