SIMON FRASER ECON290 Lecture Notes - Fiscal Federalism

SIMON FRASER ECON290 Lecture Notes - Fiscal Federalism -...

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Fiscal Federalism (chapter 18, pages 628 - 642) 1. Concepts Fiscal federalism is the division of taxing and spending functions among levels of government. Multiple levels of government: (1) Federal government (2) Provincial government (3) Local government Multilevel system of government, each with its own power to provide services and raise revenue. 2. The Supply of Local Public Goods in a Federal System Local public goods are public goods whose benefits are non-rival and non-excludible only for a portion of the national population. Advantage: It allows the system of government to accommodate a wide array of tastes and demands for their services. 3. Centralized vs. Decentralized Government Centralized government: Collective choices on government provided services are made nationally. Central provision of these services tends to result in uniformity of quality and quantity of public goods across all regions of a country. Decentralized government: Collective choices are made locally. It takes into account the
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SIMON FRASER ECON290 Lecture Notes - Fiscal Federalism -...

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