Working Paper by Liqun Liu Published in the Journal of Economics

Mar 28, 2022
Summary: The PERC working paper, “Optimal Regional Insurance Provision: Do Federal Transfers Complete Local Debt?” by Liqun Liu, along with coauthors Darong Dai, Weige Huang, and Guoqiang Tian has been published in the Journal of Economics.

Intergovernmental grants implemented by the central government of a federal fiscal system are justified on the grounds that they internalize interregional spillovers generated by local public goods provision or inter-jurisdictional migrations, redistribute income between regions, and serve as a risk-sharing device against region-specific shocks. In this working paper, the authors study the design and implementation of optimal regional insurance provision against privately observable shocks to the degree of intergenerational externality induced by, or the degree of technological progress for producing, intergenerational public goods. 

Click here to read the article in the Journal of Economics.

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