Skip to Content

Search: {{$root.lsaSearchQuery.q}}, Page {{$}}

Can Fiscal Externalities Be Internalized?

Erzo Luttmer, Dartmouth College
Monday, March 20, 2023
4:00-5:30 PM
B0570 Ross School of Business Map
Subsidies and in-kind transfers give rise to negative fiscal externalities. However, internalizing negative fiscal externalities through taxation would undo the subsidy or in-kind transfer that caused them. Similarly, positive fiscal externalities cannot be internalized though government subsidies. This paper describes a mechanism that transfers fiscal externalities from the government to private parties. Such transfers generate incentives within the private sector to reduce inefficiencies caused by fiscal externalities. Thus, the paper offers a straightforward, but powerful, insight: transferring fiscal externalities to third parties extends the reach of the Coase Theorem to inefficiencies stemming from fiscal externalities.
Building: Ross School of Business
Event Type: Workshop / Seminar
Tags: Economics, Public Finance, seminar
Source: Happening @ Michigan from Department of Economics, Public Finance, Department of Economics Seminars