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GTAP Resource #1032

"Australian Federalism: A CGE Analysis of Inter-government Transfers"
by Dixon, Peter, Mark Picton and Maureen Rimmer

Using a general equilibrium model, we calculate that adoption of equal-per-capita funding of the States by the Commonwealth would raise Australian welfare by at least $150 million annually. Under the present funding system, governments in subsidized States exhibit a flypaper effect: money thrown at them sticks even though households would be better served if it were passed on through lower taxes. Our results are not very sensitive to variations in assumptions concerning population mobility and fiscal externalities. Only by making extreme assumptions concerning congestion or by eliminating flypaper effects could we produce results with annual welfare gains below $150 million.

Resource Details (Export Citation) GTAP Keywords
Category: 2002 Conference Paper
Status: Published
By/In: Presented at the 5th Annual Conference on Global Economic Analysis, Taipei, Taiwan
Date: 2002
Created: Picton, M. (4/30/2002)
Updated: Bacou, M. (7/2/2002)
Visits: 3,545
- Domestic policy analysis

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