By Alberto Diaz-Cayeros
This booklet explores the politics of financial authority, targeting the centralization of taxation in Latin the USA throughout the 20th century. The e-book stories this factor in nice element for the case of Mexico. The political (and economic) fragmentation linked to civil battle first and foremost of the century used to be finally remodeled right into a hugely centralized regime. The research indicates that financial centralization can top be studied because the outcome of a discount struck among self-interested neighborhood and nationwide politicians. economic centralization was once extra severe in Mexico than in such a lot different locations on the planet, however the demanding situations and difficulties tackled through Mexican politicians weren't certain. The e-book hence analyzes monetary centralization and the origins of intergovernmental monetary transfers within the different Latin American federal regimes, Argentina, Brazil, and Venezuela. The research sheds mild at the components that designate the consolidation of tax authority in constructing nations.
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Extra resources for Federalism, Fiscal Authority, and Centralization in Latin America
Al. (2001) and Alesina and Spolaore (2003). 5. Federal bargain: Time inconsistency. state or provincial incumbents are likely to remain in ofﬁce and the federal government has no way to affect this probability, they are more likely to reject a transfer system. In contrast, if state authorities were appointed and removed at will by the federal government, they should have short temporal horizons, making the game more similar to a one-shot scenario. Term limits or the prohibition of reelection should have an effect analogous to reducing the discount factor.
A third possibility is that states might agree on using any additional resources as a redistributive tool, allocating more funds to regions with larger needs, more poverty, or unfulﬁlled public services. Finally, it is conceivable that states will demand that resources be allocated according to what they perceive as their own effort or the local economic base that makes federal tax collection possible. What determines that a particular distributional outcome obtains rather than another? Once the commitment problem is solved among the members of a federal arrangement, it seems plausible to propose that they can divide the beneﬁts of their agreement in a cooperative manner.
State governments are treated as unitary actors, represented by their governor, who seeks to maximize revenue. The utility function of the governor is determined by the way in which total revenue-collection effort ( Ei ) is allocated among federal and local taxes according to Ui = [ p i e i + ri (Ei − e i )] 25 26 27 for states i = 1, . . 1) An important limitation of the framework is that it is completely silent on the procedural mechanisms involved in the cooperative outcome. A noncooperative model of counteroffers, in the spirit of Rubinstein (1982) could make the strategic interaction more explicit.
Federalism, Fiscal Authority, and Centralization in Latin America by Alberto Diaz-Cayeros