The overspending and flypaper effects of fiscal illusion: theory and empirical evidence

Article Abstract:

The model of fiscal illusion in public finance was extended to include imperfect information about the tax price as well as the relationship between spending and public goods consumption. The model assumes that voters are uncertain about how much they must pay for additional services or about the services they receive in return for higher taxes. The overspending and flypaper effects predicted by the certainty model was also modified while showing how each type of voter imperfect information affects public spending. Empirical results from a study of municipal expenditures confirm the broader concept of fiscal illusion as tax price and public consumption imperfect information. It was also found that the degree of government budgetary complexity affects the output and flypaper effects of fiscal illusion.

Public Finance Activities, Taxes NEC, Public Finance-Local, Information Theory, Information technology, Public finance, Consumption (Economics), Uncertainty, Local finance, Information theory in economics, Local budgets

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Labor heterogeneity in an urban labor market

Article Abstract:

This article applies an agglomeration economies model to a labor market with friction and heterogeneity of workers and firms. The author demonstrates that the increase in number of employees improves the worker-firm match quality and agglomeration economies will only emerge if the technology of search increases returns to scale.

Metropolitan areas

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A note on unemployment and capital tax competition

Article Abstract:

The relation between capital tax competition and unemployment in labor markets is examined. Factors causing labor market imperfection, such as fixed wage, job search, are discussed.

Unemployment, Taxes, Analysis, Economic aspects, Labour market, Capital levy, Capital taxes

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