Optimal interregional redistribution and local borrowing rules under migration and asymmetric information Academic Article uri icon

abstract

  • AbstractAssuming two types of regions that differ only in the discount rate, Huber and Runkel show that optimal federal redistribution is from impatient to patient regions, and optimal local public debt is higher in impatient regions than that in patient regions. This paper extends their analysis by allowing for interregional migrations and by considering two alternative regional goals. When the regional governments maximize their respective residents welfare, considering the interregional migrations does not change Huber and Runkel's analysis. When the regional governments maximize their respective natives welfare, incorporating migrations would reverse Huber and Runkel's conclusions when migration intensity is sufficiently high and the regional difference is sufficiently large.

published proceedings

  • Journal of Public Economic Theory

author list (cited authors)

  • Dai, D., Liu, L., & Tian, G.

citation count

  • 7

publication date

  • December 2019

publisher