Balanced budget multipliers for small open regions within a federal system : evidence from the Scottish variable rate of income tax

Lecca, Patrizio and McGregor, Peter G. and Swales, J. Kim and Yin, Ya Ping (2014) Balanced budget multipliers for small open regions within a federal system : evidence from the Scottish variable rate of income tax. Journal of Regional Science, 54 (3). pp. 402-421. ISSN 0022-4146

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    Abstract

    This paper explores the impact on aggregate economic activity in a small, open region of an income tax funded expansion in public consumption that has no direct supply-side effects. The conventional balanced budget multiplier produces an unambiguously positive macroeconomic stimulus, but the incorporation of negative competitiveness elements, through the operation of the local labor market, renders this positive outcome less certain. Simulation using a single-region Computable General Equilibrium (CGE) model for Scotland demonstrates that the creation of local amenity effects, and the extent to which these are incorporated into local wage bargaining, is central to the analysis.

    ORCID iDs

    Lecca, Patrizio, McGregor, Peter G. ORCID logoORCID: https://orcid.org/0000-0003-1221-7963, Swales, J. Kim and Yin, Ya Ping;
    • Item type:Article
      ID code:45789
      Dates:
      Date
      Event
      June 2014
      Published
      27 February 2014
      Published Online
      Notes:This is the accepted version of the following article: Lecca, P., McGregor, P. G., Swales, J. K. and Yin, Y. P. (2014), BALANCED BUDGET MULTIPLIERS FOR SMALL OPEN REGIONS WITHIN A FEDERAL SYSTEM: EVIDENCE FROM THE SCOTTISH VARIABLE RATE OF INCOME TAX. Journal of Regional Science, 54: 402–421. doi: 10.1111/jors.12113, which has been published in final form at http://onlinelibrary.wiley.com/doi/10.1111/jors.12113/full.
      Keywords:income tax, public consumption, macro-economic model, computable general equilibrium model, wage bargaining , fiscal expansion, local economic strategies, Scottish economy, Economic Theory, Economics and Econometrics
      Subjects:Social Sciences > Economic Theory
      Department:Strathclyde Business School > Economics
      Depositing user: Pure Administrator
      Date deposited:08 Nov 2013 17:02
      Last modified:16 Jul 2021 01:07
      Related URLs:
      URI:https://strathprints.strath.ac.uk/id/eprint/45789
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