What drives vertical fiscal interactions? Evidence from the 1980 Crude Oil Windfall Act

Working paper

In economies with multi-level governments, why would a change in the scal rule of a gov-ernment in one level lead to a scal response by a government in a di¤erent level? Previous explanations focus on the standard common-pool problem. In this paper we study a new potential channel: complementarities between the public goods supplied by the two governments. First, we illustrate its potential key role in determining the sign of the vertical reaction through a standard model of horizontal t...

Expand abstract

Authors: Perez-Sebastian, F; Raveh, O

• Publication status: Published
• Publisher: University of Oxford Publisher's website
• Series: OxCarre Papers
• Publication date: 2016-11-23
• Paper number: 183
• Keywords: federalism; complimentarities; common-pool problem; natural resources; vertical fiscal reactions