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Fiscal federalism is meant to benefit from both the advantages of centralization and decentralization in public revenues and expenditures, the optimal allocation of competencies between levels of governement depending on the nature of revenues, public goods or services. For historical, political or practical reasons, this optimal allocation is not always attainable. Therefore, fiscal federalism may raise new issues in efficiency or equity, in the form of spill-over effects, harmful fiscal competition or fiscal imbalance. To tend to the optimum, it is necessary to evaluate the extent of inefficiencies or inequities and to design corrective mechanisms in order to minimize them. This thesis adopts such an approach in four different situations. First, we measure empirically and dynamically the presence of fiscal competition between Belgian municipalities. The analysis reveals the existence of fiscal competition, but with a rather slow pace of adjustment of taxe rates over time. This pace depends on the mobility of tax bases and on the similarity of neighboring municipalities with respect to some socio-economic characteristics. Second, we evaluate the effects of the Belgian fiscal equalization mechanism on equity. This analysis shows the existence of a poverty trap at the level of regions and proposes a range of solutions, inspired by equalization mechanisms applied in other federal States. Third, we analyse the case of multiple States emitting multiple pollutants where a trade-off exists between producing goods and minimizing pollution. We propose a form of inter-State transfers such that all States adopt a behaviour leading to the collective optimum. To be sustainable, the collective optimum must be individually rational. We show that this condition is respected with the proposed transfer formula. Fourth, we examine the case of harmful fiscal competition between two countries differing in size, the small country being seen as a fiscal heaven. In order to reach the collective optimum, fiscal cooperation is needed. To convince the tax heaven to cooperate, a specific formula of transfers between the large and the small country is proposed, such that both countries are better off. / Le fédéralisme fiscal a pour objectif de bénéficier à la fois des avantages de la centralisation et des avantages de la décentralisation des revenus et dépenses publiques. La répartition optimale des compétences entre différents niveaux de pouvoir est déterminée par la nature des revenus, dépenses et biens et services publics. Pour des raisons historiques, politiques ou pratiques, cette répartition optimale n'est pas toujours accessible. En conséquence, les avantages du fédéralisme fiscal peuvent s'accompagner de problèmes d'efficacité ou d'équité sous la forme d'effets de débordement, de concurrence fiscale dommageable ou de déséquilibre fiscal. Pour tendre vers l'optimum, il convient dès lors d'évaluer l'ampleur des inefficacités et inéquités et de concevoir des mécanismes correctifs pour les atténuer. Cette thèse applique cette démarche à quatre situations particulières. Premièrement, nous mesurons la présence de concurrence fiscale entre les communes belges, de façon empirique et dynamique. L'analyse met en lumière l'existence d'une concurrence fiscale certaine, mais avec une vitesse d'ajustement des taux de taxation relativement faible dans le temps. Cette vitesse d'ajustement dépend de la mobilité des bases imposables et de la similitude des communes voisines en termes de caractéristiques socio-économiques. Deuxièmement, nous évaluons les effets redistributifs et incitatifs du mécanisme belge de péréquation financière. Cette analyse démontre la présence d'un effet de « piège à pauvreté » au niveau des Régions et propose une série de solutions pour y remédier, en s'inspirant de mécanismes étrangers. Troisièmement, nous analysons le cas de multiples Etats émettant de multiples polluants, dans un contexte où un arbitrage doit être effectué entre la production de biens et la minimisation de la pollution. Nous proposons une forme de transferts à appliquer entre Etats de sorte que tous les Etats sont amenés à adopter un comportement menant à l'optimum collectif. Pour être soutenable, l'optimum collectif doit être individuellement rationnel. Nous démontrons que la formule proposée respecte cette condition. Quatrièmement, nous examinons le cas d'une concurrence fiscale dommageable entre deux pays différents en taille, où le petit pays peut être considéré comme un paradis fiscal. Afin d'atteindre l'optimum collectif, une coopération fiscale est nécessaire. Afin de convaincre le paradis fiscal de coopérer, une forme spécifique de transferts entre le grand et le petit pays est proposée, de sorte que tous deux préfèrent coopérer.

Putin's military forces invaded Ukraine on February 24, 2022, sparking a renewed academic interest in Russia's current regime. Several scholars suggested that a critical period in the construction of the current regime occurred between 1999-2013 during Putin's first two presidencies followed by the Medvedev presidency. This is when the basic institutions of the current Russian political system were changed to recentralize state authority and prevent Russian Federation from looming disintegration. One such institution was the budgetary process. Signed into law in 1998, Russian Budget Code established how funds were disbursed from the "center" to the federal "subjects" and other entities. Many scholars have pointed out that one specific mechanism, namely "Intergovernmental Transfers", can be used to achieve the political goals of a regime by rewarding supporters, swinging the competitive electoral districts, or appeasing the opposition or separatist regions. The goal of this dissertation to investigate under what conditions a non-democratic regime, like Russia, uses these strategies for political effect? Do those strategies change over time? In this work, I develop a basic theoretical framework outlining such conditions and test it using the municipal-level data gathered from the Russian Federal State Statistics Service and Central Election Commission of the Russian Federation.

This dissertation is composed of three essays, each examining a unique question relating to the role of intergovernmental transfers in fiscal federalism. Using a panel of the 48 contiguous U.S. states along with recent advances in nonstationary panel and spatial econometric methods this dissertation offers a number of important insights into the workings of intergovernmental transfers and therefore a clearer understanding of the interactions among the different layers of government. The third chapter examines the relationship between intergovernmental revenues from the federal government and intergovernmental expenditures to local governments. As observed by Wildasin (2010), there remains remarkable stability in the ratio of state-tolocal transfers to federal-to-state transfers despite the disparate programs being financed by each. Therefore, the purpose of this essay is to examine the extent to which states serve as a conduit for funds from the federal government to local governments. In particular, the research question asks to what degree do federal transfers stimulate transfers to local governments. The fourth chapter explores the direction of causality between tax revenues and expenditures in answering the four hypotheses set forth in the literature: tax-spend, spend-tax, fiscal synchronization, and institutional separation. Furthermore, along with exploring the role served by intergovernmental transfers within the revenue-expenditure nexus, this essay also examines differences relating to the revenue-expenditure nexus between states with relatively higher debt levels and states with low debt levels, in order to better understand the fiscal causal links favorable for debt accumulation. The purpose of the fifth chapter is to ascertain the effect interstate fiscal interactions on the stimulative effect of grants on state level expenditures. The vast literature on fiscal competition suggests that states do not make decisions in isolation, therefore, spatial econometrics are used to capture spillovers and mimicking behavior across states. Following Boarnet and Glazer (2002), the effect of informational externalities arising from grants awarded to neighboring states are examined as well as the effect of spending spillovers from neighboring states. The results show that the flypaper anomaly (i.e. the stimulative effect of grants greater than a pure income effect) can be explained by interstate fiscal interactions.

We address the questions on what determines local government proliferation, specifically on the impact of intergovernmental transfers on proliferation. On exploring the determinants of proliferation, we provide a more elaborate empirical technique than exists in the literature by employing panel binary outcome, survival regression, as well as count analysis to capture the time varying effect from intergovernmental transfers. We also examine the impact of proliferation on service delivery outcomes and construct channels by which the policy may affect the outcomes in the education and health sectors. We apply panel difference-in-difference estimation and we uniquely identify the different treatment group and thus control for the plausible differential impact on outcomes in regards to changes in intergovernmental transfers. On the determinants of local government formation, there are likely competing effects across transfers on the decision to proliferate as well as on the extent of fragmentation given that we find (1) the lump-sum conditional grants positively influence the probability of proliferation, (2) a province with higher median share of equalization grants associates with higher number of local governments, (3) higher equalization grants implies a longer duration to the proliferation event, and (4) higher tax sharing in the proliferated local governments reflects higher stability where stability refers to the longer duration to the sequential proliferation event. The findings suggest the tactical central-local behavior may be present, however, the support of rent-seeking hypothesis on proliferation should not be generalized to overall system of transfers. On the impact from the proliferation policy, the education and health outcomes estimations provide mixed results within the treatment group. The findings shed light on the current practice of administrative or political decentralization, specifically on the competing local-central preferences within each sector on measured service delivery outcomes. The results from difference-in-difference (DID) estimations show support on attainment of education outcome in new local governments represented by a reduction in the dropout rate but not on the quality of education in terms of higher students’ tests scores even though there is a relatively higher conditional grants allocated to the proliferated local governments. Meanwhile, in terms of infant mortality rate, we only find evidence of improvement in infant mortality on the originating local government but not on the new local governments. Controlling for selectivity and production function covariates have not changed the pattern of the impact.

No / This chapter reviews the substantive issue of the contemporary intertwining of both national and overall EU economy in relation to the spectre of monetary union through first evaluating a country’s readiness for euro entry through a comparison between the convergence criteria stipulated in the Treaty on European Union and the theory of optimal currency areas, which leads to discussion of the economic costs and benefits of euro membership. However, given the unprecedented strain eurozone has now come under the also chapter examines the background to the current eurozone crisis; specifically, how the Global Financial Crisis induced Great Recession triggered the problems within the eurozone. Subsequently, the chapter explores how the advent of EMU has significantly redefined the operation of fiscal and monetary policy with the former retained by member states, but proscribed by EMU-wide rules, whilst the latter has been assumed by a specifically created independent central bank. Hence, the chapter explores the theoretical underpinnings of the operation of monetary and fiscal policy within EMU, where it examines the conduct, coordination and philosophy of macroeconomic policymaking. This analysis is then extended by discussing a series of potential remedies, consisting of an evaluation of EU instigated solutions, together with a series of alternative propositions. However, whilst the economic remedies to the eurozone crisis may eventually succeed, the greater long-term damage may well emerge through the political sphere with the imposition of unelected technocrat governments, together with growing dissatisfaction of mainstream political parties with support for either the far-right, protest parties, anti-euro parties, anti-EU parties, or member states losing confidence in the direction of ‘ever closer union’.

No / The pace of economic integration amongst European Union (EU) member states has accelerated considerably during the past decade, highlighted by the process of Economic and Monetary Union (EMU). Many aspects of the EU's apparatus, however, have failed to evolve in order to meets these new challenges. This book explores the issue of fiscal federalism within the context of EU integration from theoretical, historical, policy and global perspectives. It contrasts the pace of integration amongst EU member states with the failure of financial and administrative apparatus to evolve to encompass fiscal federalism, i.e. the development of a centralised budgetary system. This impressive collection, with contributions from a range of internationally respected authors, shall interest students and researchers involved with European economics and economic integration. Its accessible style will also make it extremely useful to policy-makers and professionals for whom European economic integration is a daily topic of conversation.

This paper examines the response of Swedish local governments to a targeted intergovernmental stimulus grant aimed at increasing staffing levels in elderly care. The focus is on two key outcomes: municipal elderly care personnel costs relative to total municipal costs and the number of full-time employees in elderly care per elderly user. An OLS regression based on panel data between 2011 and 2018 initially estimates the grant’s spending effects. An instrumental variable (IV) model is then employed to address potential endogeneity, utilizing an update in the grant allocation formula. Both the OLS and IV estimates suggest that the stimulus grant has no discernible effect on the ratio of elderly care personnel costs to total municipal spending. Furthermore, the IV results show insignificant short-run effects on full-time employment in elderly care. However, significant increases are observed three years after the allocation formula update. The overall effects confirm standard economic grant theory predicting how non-matching targeted grants only contribute to an income effect.

This dissertation examines multiple state and local expenditure categories in the United States to expand understanding of fiscal federalism and spatial interactions among governments. First, the author investigates the relationship between police expenditures and crime rates from a spatial perspective. Both police expenditures and crime rates in one state are found to exhibit a similar pattern to that in neighboring states. Spatial correlation is also detected between police expenditures and crime rates. As police of neighbors in fact deter crime at home, there are positive externalities present among the states. Second, the author conducts new tests on the Leviathan hypothesis, i.e., more competition, smaller government. While cost efficiency is used in place of government size to capture the idea that fiscal decentralization reduces wasteful expenditures, spatial interaction is taken as another measure for decentralization. The hypothesis is supported by some evidence from total, police, highway, and welfare expenditures.

Au regard des dégâts environnementaux au cours des dernières années, il est important de mettre en œuvre des politiques environnementales efficaces afin de lutter contre le changement climatique, de préserver la biodiversité, et de réduire les pollutions de l'eau et de l'air. Le secteur énergétique est l'un des principaux contributeurs à la détérioration de l'environnement. Ainsi, afin d'atteindre les objectifs environnementaux, l'établissement de politiques énergétiques efficaces est primordial. A cet effet, il semble indispensable de mener une démarche inclusive et transversale en impliquant l'ensemble des acteurs des différents échelons (locaux, régionaux, nationaux, internationaux,...). Dès lors, l'identification de l’échelon optimal est cruciale dans une optique d'élaboration des politiques énergétiques efficaces. La thèse s'attache précisément à éclairer les enjeux liés à la fiscalité énergétique. Ainsi, l'objectif principal de cette thèse est d'analyser la nature des interactions environnementales, qu'elles soient entre régions ou Etats, en termes de fiscalité ou de dépenses environnementales. Les contributions de cette thèse sont à la fois théorique et empirique. D'un point de vue empirique, cette thèse s'est d'abord focalisée sur l’étude de la fiscalité énergétique sous l'angle des interactions spatiales. En particulier, le chapitre 1 teste la présence des interactions spatiales des départements français via la vignette automobile. Ce chapitre fournit une analyse empirique de la réaction de la politique fiscale d'un département français suite à un changement de la politique fiscale de ces voisins. Tout d'abord, en utilisant une approche économétrique spatiale en panel, les résultats montrent l'existence d'une dépendance spatiale positive, suggérant l'existence d'un comportement mimétique des départements français lors de la détermination des taux de la vignette automobile. Ensuite, ce chapitre met également en évidence une relation entre les impôts directs locaux et ceux indirects locaux. En particulier, les résultats des estimations montrent que le taux de la taxe professionnelle (resp. la taxe sur le foncier non bâti) et la vignette fiscale sont des substituts alors que le taux de la taxe d'habitation (resp. la taxe sur le foncier non bâti) sont des compléments à la vignette automobile. Enfin, les résultats montrent que les départements avec des populations plus grandes, plus jeunes et plus âgées fixent des montants plus élevés de la vignette automobile. D'un point de vue théorique, le but du chapitre 2 est d'analyser les interactions fiscales entre plusieurs niveaux de gouvernements (en particulier deux niveaux de décisions), dans lesquels il existe plusieurs juridictions de niveaux inférieurs identiques, telles que les États ou encore les collectivités locales, et une juridiction unique de premier plan, telle que l'Etat fédéral, un pays ou une union communautaire, toutes ces juridictions pouvant taxer deux bases fiscales à savoir, le capital et la ressource énergétique. Nous déterminons grâce à la formalisation théorique les implications en termes de distorsions fiscales de l'architecture fiscale dans le cadre d'une politique énergétique. En particulier, en recourant au jeu de Nash, nos résultats montrent d'une part une substitution entre les taxes fédérales et locales sur l'énergie impliquant que les gouvernements locaux augmentent leurs taux de taxation de l'énergie en réponse à une baisse du taux de la taxe fédérale sur l'énergie, toutes choses égales par ailleurs. D'autre part, nous constatons que les taxes locales sur l’énergie ont une incidence positive sur la qualité de l’environnement, ce qui suggère que la décentralisation de la politique énergétique peut jouer un rôle crucial pour atténuer les dommages environnementaux. Enfin, à travers le chapitre 3, nous testons d'un point de vue empirique l'existence d'une interdépendance spatiale entre les pays de l'OCDE via les dépenses environnementales. / In the light of environmental damage in recent years, it is important to implement effective environmental policies to combat climate change, preserve biodiversity, and reduce water and air pollution. The energy sector is one of the main contributors to the deterioration of the environment. Thus, in order to achieve environmental objectives, establishing effective energy policies is paramount. To this end, it seems essential to carry out an inclusive and transversal approach by involving all actors at different levels (local, regional, national, international, etc.). Therefore, identifying the optimal step is crucial for effective energy policy development. The thesis focuses on clarifying the issues related to energy taxation. Thus, the main objective of this thesis is to analyze the nature of environmental interactions, be they between regions or states, in terms of taxation or environmental expenses. The contributions of this are both theoretical and empirical.From an empirical point of view, this thesis first focuses on the study of energy taxation from the perspective of spatial interactions. In particular, Chapter 1 tests the presence of spatial interactions of French departments via the car sticker. This chapter provides an empirical analysis of the reaction of the tax policy of a French department following a change in the tax policy of these neighbors. First, by using a spatial econometric panel approach, the results show evidence of spatial dependence, suggesting the existence of a mimetic behavior of French departments when determining the rates of the car sticker. Next, this chapter also highlights a relationship between local direct taxes and indirect local taxes. In particular, the results of the estimates show that the rate of the business tax (or the tax on undeveloped land) and the road tax sticker are substitutes, whereas the residential tax rate (or the tax rate on developed land) are complements to the road tax sticker. Finally, the results show that departments with larger, younger and older populations are setting higher amounts of the car sticker.From a theoretical point of view, the purpose of Chapter 2 is to analyze the tax interactions between several levels of government (in particular two levels of decision-making), in which there are several jurisdictions of similar lower levels, such as local authorities, and a single leading jurisdiction, such as the federal state, a country or a community union, all of which can tax two tax bases, namely, capital and energy resources. Through theoretical formalization, we determine the implications in terms of tax distortions of tax architecture in the context of an energy policy. In particular, using the Nash game, our results show, on the one hand, a substitution between federal and local taxes on energy, implying that local governments increase their energy tax rates in response to a fall in the rate of energy. of the federal energy tax, all other things being equal. On the other hand, we find that local taxes on energy have a positive impact on the quality of the environment, suggesting that decentralization of energy policy can play a crucial role in mitigating environmental damage.Finally, in Chapter 3, we empirically test the existence of spatial interdependence among OECD countries through environmental spending. To this end, we use data from 30 OECD countries for the period 1994-2014 and a wide range of economic and political control variables.