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 (https://doi.org/10.1111/jors.12113)

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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:28 Jan 2023 04:01
    Related URLs:
    URI:https://strathprints.strath.ac.uk/id/eprint/45789
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