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Department of Economics, WU (Wirtschaftsuniversität Wien) Working papers, Department of Economics, WU (Wirtschaftsuniversität Wien)

No 111:
Footloose capital and productive public services

Pasquale Commendatore (), Ingrid Kubin () and Carmelo Petraglia ()

Abstract: We analyse in a Footloose Capital productive public services provided by a central government aiming at reducing regional disparities. Two countervailing effects occur – one upon productivity and another upon local demand – the relative strength of which depends upon the financing scheme. Only if the “rich” region contributes sufficiently to the financing of the public services in the “poor” region, the poor region will actually gain. In studying these questions we pay particular attention to the dynamic adjustment processes and to the role of trade freeness.

JEL-Codes: H4; R1; R12; F12; (follow links to similar papers)

October 2007

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