Economics 2159A/B Lecture Notes - Lecture 13: Fiscal Federalism, Externality
19 Dec 2015
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Looks at political system in canada, clarify the distinction between pure public goods and non-pure public goods. Health care sometimes becomes the 100% of the total spend, which is very expensive. However, with increased fiscal discipline as expenditures have tended to outpace revenues, governments have been faced with the unpleasant choice of reducing their spending. Consequently, federal transfer payments to the provinces have been reduced. In turn, the provinces have been forced to engage in numerous cost-cutting measures making cuts to expenditures on health care, education, social assistance, etc. The three main provincial-local categories, accounting for 70% of the spending. In this chapter, we examine some of the issues involved in provincial and local government finance in a federal system. We will discuss theoretical issues relating to the division of responsibility for supplying public goods among various levels of government.
