Conference

"New Directions in Fiscal Federalism"
September 14-16, 2006

The Institute for Federalism and Intergovernmental Relations and CESifo have co-sponsored a conference on "New Directions in Fiscal Federalism" which took place on September 14-16, 2006 in Lexington, Kentucky.

Conference Theme

Issues of fiscal federalism -- broadly defined to include the tax, expenditure, and debt policies of different levels of government, as well their interaction -- have attracted heightened attention from academics and policymakers alike. Global changes in institutional structures and economic conditions within and among countries, including fiscal, economic, and political reforms, have highlighted the importance of the division of fiscal and political responsibilities among governments. Competition among governments, as well as the development and evolution of mechanisms of horizontal and vertical fiscal coordination and cooperation among them, have been the subject of a rapidly-developing literature. Better understanding of the fiscal policies and interactions of governments, and of their institutional and political underpinnings, presents deep intellectual challenges as well as opportunities for useful policy applications. This conference will provide a forum for presentation of current theoretical and empirical research on these topics.

Program*

Keynote Speakers

A highlight of the conference was the presentation of several keynote lectures by leading researchers in the field. These speakers presented current research finding, identified important directions for new research, and examined emerging public policy issues. The keynote speakers were:

Jean Hindriks, Universite Catholique de Louvain.
Voluntary Matching Grants Can Forestall Social Dumping
(Co-authored with Jacques Dreze and Charles Figuieres.)
Addendum: Figures 1-3.

Robert Inman, University of Pennsylvania.
Title: Why Federalism?

Peter Birch Sorensen, University of Copenhagen.
The Dilemmas of Tax Coordination in the Enlarged European Union
(Co-authored with Jens Brochner, Jesper Jensen, and Patrik Svensson.)

Barry Weingast, Stanford University.
Second Generation Fiscal Federalism: Implications for Decentralized Democratic Governance and Economic Development

John D. Wilson, Michigan State University.
Protecting the Welfare State from International Migration

George Zodrow, Rice University.
The Property Tax Incidence Debate and the Mix of State and Local Finance of Local Public Expenditures

Contributed Papers

The conference call for papers attracted many submissions, of which only a small number could be accommodated. The following papers were selected for presentation at the conference:

Kristian Behrens and Pierre M. Picard:
Tax Competition, Location, and Horizontal Foreign Direct Investment

Massimo Bordignon, Luca Colombo, and Umberto Galmarini:
Fiscal Federalism and Lobbying

Jan K. Brueckner:
Fiscal Federalism and Economic Growth

Xavier Calsamiglia, Teresa Garcia-Mila and Therese J. McGuire:
Why Do Differences in the Degree of Fiscal Decentralization Endure?

Robert S. Chirinko and Daniel Wilson:
State Investment Tax Incentives: A Zero-Sum Game?

Ernesto Crivelli and Klaas Staal:
Size and Soft Budget Constraints

Matz Dahlberg, Eva Mork, Jorn Rattso and Hanna Agren:
Local Taxes and Spending: Estimating the Flypaper Effect Using a Discontinuous Grant Rule

Marcel Gerard:
Reforming the Taxation of Multijurisdictional Enterprises in Europe: "Coopetition" in a Bottom-Up Federation

Timothy J. Goodspeed and Andrew Haughwout:
On the Optimal Design of Disaster Insurance in a Federation

Rania Karakosta and Christos Kotsogiannis:
Imperfect Competition, Principles of Commodity Taxation and Tax Inefficiencies in Federal Systems

Christos Kotsogiannis and Robert Schwager:
Fiscal Equalization and Yardstick Competition

Bernd Huber and Marco Runkel*:
Interregional Redistribution and Budget Institutions under Asymmetric Information

Albert Sole-Olle and Pilar Sorribas:
The Effects of Partisan Alignment on the Allocation of Intergovernmental Transfers: Differences-in-differences Estimates for Spain

Matthias Wrede:
Uniformity Requirement and Political Accountability

*Dr. Runkel was unable to attend the conference. Instead, David Wildasin presented research on
"Disasters: Issues for State and Federal Government Finances"

Marcel Gerard's paper was discussed by Thiess Buettner.