Fiscal Competition for Imperfectly-Mobile Labor and Capital: A Comparative Dynamic Analysis
David E. Wildasin
University of Kentucky; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Institute for the Study of Labor (IZA)
CESifo Working Paper Series No. 2808
Interjurisdictional flows of imperfectly-mobile migrants, investment, and other productive resources result in the costly dynamic adjustment of resource stocks. This paper investigates the comparative dynamics of adjustment to changes in local fiscal policy with two imperfectly mobile productive resources. The intertemporal adjustments for both resources depend on complementarity/substitutability in production and the adjustment cost technologies for each, implying that the evaluation of the fiscal treatment of one resource must account for the simultaneous adjustment of both.
Number of Pages in PDF File: 39
Keywords: fiscal competition, labor mobility, capital mobility, comparative dynamics
JEL Classification: B23, H22, H71, H87, J61working papers series
Date posted: October 12, 2009
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