Fiscal decentralization, Government size, Dynamic panel, Cointegration, Error-correction model, European countries, H5, H7, C23,

No abstract

This article contributes to the literature on local tax interactions, with an innovative focus on interactions of local governments across national borders. We use a panel data set of the municipalities in France and in Germany along the Rhine Valley to estimate an empirical model of strategic interactions between French and German local jurisdictions over the period 2000-2007. Local governments in either country can influence the overall tax burden of firms. We estimate panel models in which we distinguish between the influence of competing municipalities which belong to the same country and the effect of competing municipalities which belong to different countries, sharing a border. Our estimations show that local jurisdictions along the border choose their business tax rates only by looking at their domestic neighbors. The foreign local fiscal policy does not have an impact on the domestic tax setting behavior.

Abstract:In this article, we study short and long-run effects of trade openness in services on wage inequalities between different points of the income distribution. The sample covers 10 OECD countries from 1980 to 2005. We find a differentiated impact of trade in goods compared to trade in services: while trade in goods has a short and a long-run impact on inequalities, trade in services has only long-run effects. We also find that international trade in services enhances inequalities in a stronger way than international trade in goods. JEL classification: C23, F10, D31 We would like to thank