Identifying Strategic Interactions in Swedish Local Income Tax Policies
2008 (English)In: Journal of Urban Economics, ISSN 0094-1190, E-ISSN 1095-9068, Vol. 63, no 6, 849-857 p.Article in journal (Refereed) Published
This paper uses data on Swedish local governments to test for strategic interaction in local tax setting. We make use of a number of indirect predictions from the theories of tax competition and yardstick competition in order to test for the presence of strategic interaction in these forms. Using such additional predictions of the theories serves a twofold purpose-first it helps us establish if the spatial coefficient is due to strategic interactions or merely reflecting spatial error correlation, and second, it helps identify the source of interaction. The analysis provides strong evidence for spatial correlation in tax rates among Swedish local governments. Moreover, we find weak evidence of tax competition effects in the setting of tax rates.
Place, publisher, year, edition, pages
2008. Vol. 63, no 6, 849-857 p.
Fiscal Federalism, Local income tax, Spatial auto-correlation, Tax competition, Yardstick competition
IdentifiersURN: urn:nbn:se:uu:diva-96211DOI: 10.1016/j.jue.2007.06.001ISI: 000255724900007OAI: oai:DiVA.org:uu-96211DiVA: diva2:170709