Tag Archives: Centralization

After months of consumer price increases and after countless working households found themselves in dire financial straits struggling to make ends meet, in the late May, President Biden finally revealed his grand plan to fight inflation in an op-ed for the Wall Street Journal. The much-anticipated response to the cost of living crisis that has been ravaging the nation sadly did not contain the silver bullet that so many Americans were hoping for. Instead, it consisted of obvious...

Journal of Monetary Economics, with Martin Gonzalez-Eiras. PDF. (Appendix: PDF.) We propose a theory of tax centralization in politico-economic equilibrium. Taxation has dynamic general equilibrium implications which are internalized at the federal, but not at the regional level. The political support for taxation therefore differs across levels of government. Complementarities on the spending side decouple the equilibrium composition of spending and taxation and create a role for...

The corona effect Although the German court ruling had nothing to do with this latest wave of easing and money printing triggered by the coronavirus crisis, the timing of it puts the present situation in a different perspective. This crisis has served as a “judgment day” of sorts. It revealed the countless failures, the incompetence and the disarray at the very core of most institutions, not just in Europe, but globally. The more decentralized nations did fare relatively better...

Accepted for publication in the Journal of Monetary Economics, with Martin Gonzalez-Eiras. PDF. (Appendix: PDF.) We propose a theory of tax centralization in politico-economic equilibrium. Taxation has dynamic general equilibrium implications which are internalized at the federal, but not at the regional level. The political support for taxation therefore differs across levels of government. Complementarities on the spending side decouple the equilibrium composition of spending and...

Accepted for publication in the Journal of Monetary Economics, with Martin Gonzalez-Eiras. PDF. (Appendix: PDF.) We propose a theory of tax centralization in politico-economic equilibrium. Taxation has dynamic general equilibrium implications which are internalized at the federal, but not at the regional level. The political support for taxation therefore differs across levels of government. Complementarities on the spending side decouple the equilibrium composition of spending and...

University of Copenhagen, Department of Economics Discussion Paper 17-18, July 2017, with Martin Gonzalez-Eiras. PDF. We propose a theory of tax centralization and intergovernmental grants in politico-economic equilibrium. The cost of taxation differs across levels of government because voters internalize general equilibrium effects at the central but not at the local level. The equilibrium degree of tax centralization is determinate even if expenditure-related motives for centralization...

On the FT’s Alphaville blog, Izabella Kaminska questions the value of decentralization (and thus, blockchain technology) in intermediation. Decentralisation is, in almost all cases, not an efficiency. To the contrary, it’s a cost that adds complexity and creates an unnecessary burden for both users and operators unless centralised layers are added on top of it — defying the whole point. … At the end of the day, there are only two groups of people prepared to go to costly lengths to...

CEPR Discussion Paper 11482, August 2016, with Martin Gonzalez-Eiras. PDF. Also published as CESifo Working Paper 6062, Study Center Gerzensee Working Paper 16-05. PDF, PDF. We propose a theory of tax centralization and inter governmental grants in politico-economic equilibrium. The cost of taxation differs across levels of government because voters internalize general equilibrium effects at the central but not at the local level. This renders the degree of tax centralization and the tax...