Fiscal Policy Interdependence and Efficiency

Willem H. Buiter, Kenneth M. Kletzer

NBER Working Paper No. 3328
Issued in April 1990
NBER Program(s):   ITI   IFM

international transmission of fiscal policy among open interdependent economies under free international capital mobility. With only lump-sum taxes and transfers, international transmission involves only pecuniary externalities: barring dynamic inefficiency, only distributional issues (intergenerational and international) are involved. With age-specific taxes and transfers, the ability to run deficits and issue debt does not enhance the choice set of the governments. Source-based taxes on the rentals from capital and residence-based taxes on all property income are also studied.

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Published: Buiter, Willem H. and Kenneth M. Kletzer. "Fiscal Policy Coordination As Fiscal Federalism: Economic Integration, Public Goods And Efficiency In Growing Economies," European Economic Review, 1992, v36(2/3), 647-653.

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