Growth incentives and devolved fiscal systems

Lisenkova, Katerina and Greig, Alastair and McGregor, Peter G. and Roy, Graeme and Swales, J. K. (2021) Growth incentives and devolved fiscal systems. Regional Studies. ISSN 0034-3404 (https://doi.org/10.1080/00343404.2021.2006172)

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Abstract

This paper explores the characteristics of a range of stylised devolved fiscal systems which have been applied, or proposed, as a means of funding the devolved Scottish Government. The central aim is to identify those schemes that most effectively provide incentives for the pursuit of growth promoting policies by the regional government. Using simulations with an intertemporal, computable general equilibrium model for Scotland, it did not prove possible to uniquely rank a range of devolved fiscal systems in terms of the extent of growth incentive that they provide. Moreover, rather counter-intuitively, tax-sharing regimes do not necessarily improve growth incentives relative to more basic block grants.

ORCID iDs

Lisenkova, Katerina ORCID logoORCID: https://orcid.org/0000-0003-0264-9797, Greig, Alastair, McGregor, Peter G. ORCID logoORCID: https://orcid.org/0000-0003-1221-7963, Roy, Graeme and Swales, J. K.;