Series: IMF Working Papers
Author(s): Michel Le Breton , and Shlomo Weber
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 01 November 2001
Keywords: Transfer Schemes, Partial Equalization, Threat of Secession, compensation, taxation, fiscal capacity, budget constraint, fiscal federalism, Subsidies, and Revenue: General,
In this paper we consider a model of the country with heterogeneous population and examine compensation schemes that may prevent a threat of secession by dissatisfied regions. We show that horizontal imbalances are...