Ch18 FISCAL FEDERALISM AND STATE AND LOCAL GOVERNMENT FINANCE（课件）- 《财政金融英文版》同步教学（人民大学版）

FISCAL FEDERALISM AND STATE AND LOCAL GOVERNMENT FINANCE C h a p t e r 18 Fiscal Federalism Federal system of government is characterized by numerous levels of government, each with its own powers to provide services and raise revenue Three categories: federal (or central), state, local Fiscal federalism is division of taxing and expenditure functions among levels of government Many government-supplied services require central coordination and can be costly or impossible to provide by local governments Economic stabilization programs, major social programs, etc. Supply of Local Public Goods Local public goods – goods with benefits that are nonrival only for that portion of the national population who live within a certain geographical area Likely to be most effectively produced by local governing units Police and fire protection, refuse collection, traffic control Allows governments to accommodate wide array of tastes and demands for services in accordance with local variations in demand patterns and cost conditions Citizens with similar tastes in certain public services tend to congregate together, form local governments National v. Local Political Equilibrium Central provision of government services tends to result in uniformity of quality and quantity of public goods across all regions Resulting collective choices represent national political equilibrium Means of financing government-provided services can vary with local desires when government is decentralized Tax and expenditure decisions in one governing jurisdiction not independent of those in others Political Jurisdiction A defined geographical area within which individuals make collective choices on government functions and government-provided services Each has a governing authority, its own political institutions In federal system, political jurisdictions both centralized and decentralized Each citizen within jurisdiction of central government; lower levels of government represent subsets of the populat