Julio López-Laborda, Antoni Zabalza

Redistributive effects of regional transfers: a conceptual framework

This paper presents a conceptual framework to analyse the redistributive impact of transfers in the context of a decentralized economy. The framework is illustrated by means of a numerical example that describes an economy with three regions and two levels of government —the central level and the regional level—. With this set up, the paper analyses a variety of transfer systems and considers its effects on redistribution using as benchmark a centralized version of this economy, in which tax capacity is unevenly distributed across the three regions and central government public expenditure is distributed across regions according to their population.

Keywords: regional transfers; redistribution; regional finance

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