Wallace Oates


NBER Working Papers and Publications

May 2012On Fiscal Illusion and Ricardian Equivalence in Local Public Finance
with H. Spencer Banzhaf: w18040
We re-evaluate two forms of fiscal illusion in local public finance: debt illusion and renter illusion. The Ricardian Equivalence Theorem for local governments suggests the form of finance of a public program (tax or debt finance) has no effects on substantive outcomes. For the local case, this results from the capitalization of local fiscal differentials into property values. We show that this version of the model is quite restrictive. In particular, in the U.S, context, where state and local interest is exempt from federal taxation, rational behavior may be inconsistent with Ricardian equivalence if local governments can borrow on more favorable terms than individuals. We also suggest a new test for renter illusion (or the renter effect). In particular, whether or not renters are m...

Published: "On Fiscal Illusion in Local Public Finance: Re-examining Ricardian Equivalence and the Renter Effect," National Tax Journal 66(3), 2013, pp. 511-40 (with W.E. Oates).

January 1998The Impact of the New Deal on American Federalism
with John J. Wallis
in The Defining Moment: The Great Depression and the American Economy in the Twentieth Century, Michael D. Bordo, Claudia Goldin, and Eugene N. White, editors
October 1985Assistance to the Poor in a Federal System
with Charles Brown: w1715
This paper explores the roles of different levels of government in assisting the poor. Using a model with utility interdependence, the paper presents some theoretical results on how levels of poor relief vary with the extent of mobility of the poor under both centralized and decentralized systems of support. After surveying the relevant empirical work and the experience under the English Poor Laws, the paper argues for a basic role for central government in this function.

Published: Brown, Charles and Wallace Oates. "Assistance to the Poor in a Federal System," Journal of Public Economics, Vol. 32, No. 3, April 1987, pp. 307-330. citation courtesy of

1975The Instruments for Environmental Policy
with William Baumol
in Economic Analysis of Environmental Problems, Edwin S. Mills, editor
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