Fiscal Equalisation and the Soft Budget Constraint

This paper assesses the interactions of horizontal fiscal equalisation schemes with debt policy by sovereign regional governments. Local public goods are either financed by debt or taxation. A horizontal equalisation scheme eleviates regional public revenue disparities under horizontal and vertical tax competition. We show that fiscal equalisation schemes have no impact on the optimal central government grant whereas they can either soften or harden the regional budget constraint depending on the specific formulae. Revenue equalisation softens the budget constraint whereas tax base equalisation hardens the budget constraint of poor states. --Fiscal federalism,public debt,soft budget constraint,fiscal equalisation,tax competition

How Much Fiscal Equalisation?

We treat fiscal equalisation as an insurance device against regional tax revenue variance. This insurance comes at the price of a moral hazard: regional government will spend too little effort on the development of the local tax base. In a simple bargaining model with two identical regions we show that less than total fiscal equalisation combined with lump sum transfers will be optimal. Taking a step back to the constitutional bargaining behind some veil of ignorance which determines the fallback position for later negotiations, we show that writing total fiscal equalisation into the constitution will be optimal.Fiscal equalisation, constitutional bargaining, moral hazard

ADDRESSING MARKET SEGMENTATION AND INCENTIVES FOR RISK SELECTION: HOW WELL DOES RISK EQUALISATION IN THE IRISH PRIVATE HEALTH INSURANCE MARKET WORK? ESRI Research Bulletin 2017/05

Community rating restricts health insurers from varying premiums based on insurees’ risk profiles. It is a key feature of many health insurance markets. While designed to promote equity, this regulation incentivises insurers to focus on attracting low-risk (profitable) consumers while avoiding high-risk (unprofitable) consumers. This phenomenon is known as “risk selection”. Risk selection has a number of negative consequences, such as market segmentation and poor quality service to high-risk individuals (e.g. the old and sick). It also causes inefficiency where investment focusses on attracting low-risk individuals (e.g. the young and healthy) rather than improving price and quality. The best strategy for reducing risk selection incentives is good risk equalisation. Commonly, this involves providing risk-adjusted premium subsidies to insurers based on insurees’ risk profiles. These subsidies are generally administered through a risk equalisation scheme. Our study investigated the performance of Ireland’s scheme. Despite the liberalisation of the Irish health insurance market in the mid-1990s, bona-fide risk equalisation payments only commenced in 2013. The current risk equalisation system allocates risk-adjusted subsidies to insurers based on the age, sex, level of cover, and hospital utilisation, of insurees

Bit error performance of diffuse indoor optical wireless channel pulse position modulation system employing artificial neural networks for channel equalisation

The bit-error rate (BER) performance of a pulse position modulation (PPM) scheme for non-line-of-sight indoor optical links employing channel equalisation based on the artificial neural network (ANN) is reported. Channel equalisation is achieved by training a multilayer perceptrons ANN. A comparative study of the unequalised `soft' decision decoding and the `hard' decision decoding along with the neural equalised `soft' decision decoding is presented for different bit resolutions for optical channels with different delay spread. We show that the unequalised `hard' decision decoding performs the worst for all values of normalised delayed spread, becoming impractical beyond a normalised delayed spread of 0.6. However, `soft' decision decoding with/without equalisation displays relatively improved performance for all values of the delay spread. The study shows that for a highly diffuse channel, the signal-to-noise ratio requirement to achieve a BER of 10−5 for the ANN-based equaliser is ~10 dB lower compared with the unequalised `soft' decoding for 16-PPM at a data rate of 155 Mbps. Our results indicate that for all range of delay spread, neural network equalisation is an effective tool of mitigating the inter-symbol interference

Fiscal equalisation: Principles and an application to the European Union

The paper derives a normative model for partial fiscal equalisation based on a number of axioms and makes special allowance for the existence of a specific fiscal need in the jurisdictions. A simple version of this idealised equalisation scheme relates net contributions to the equalisation funds to deviations of a jurisdictions gross income from average gross income and a jurisdictions specific needs from average specific needs. The theoretical model is then empirically tested for the case of the European Union using data from 1986-97. It is found that most restrictions of the model appear to hold, in particular, relatively richer countries contribute more and those with greater fiscal needs, approximated by the importance of the agricultural sector, pay less. However, in the EU, an adjustment of net payments to changes in the actual importance of the specific fiscal need for a country is lacking. --Fiscal Equalisation,European Union

If you want me to stay, pay

Devolution of political power is constantly on the political agenda in both Italy and Spain. Fiscal policy in these countries has granted specific privileges to some regions. Valle d’Aosta/Vallée d’Aoste (VdA) and País Vasco/Euskadi (PV) have an extensive say over spending decisions, and receive nearly all regional tax revenues. Although both VdA and PV are among the richest regions in each country, both are net beneficiaries of the fiscal equalisation system. This preferential treatment is the outcome of a fiscal system with limits on taxing power and debt issuance, and is meant as a compensation for the lack of autonomy. It so prevents calls for more fiscal autonomy, or even outright secession. The economic effects of this asymmetric federalism are negative. Although partial equalisation reduces excessive redistribution built in the fiscal equalisation system, more autonomy could pay off with more efficient government. Asymmetric federalism moreover creates a political impasse in the negotiation of a more efficient tax system and financing arrangement.fiscal federalism, equalisation, secession, Valle d’Aosta, País Vasco. JEL classification:H70, H73, H77

Fiscal Equalisation: Principles and an Application to the European Union

The paper derives a normative model for partial fiscal equalisation based on a number of axioms and makes special allowance for the existence of a specific fiscal need in the jurisdictions. A simple version of this idealised equalisation scheme relates net contri-butions to the equalisation funds to deviations of a jurisdiction's gross income from average gross income and a jurisdiction's specific needs from average specific needs. The theoretical model is then empirically tested for the case of the European Union using data from 1986-97. It is found that most restrictions of the model appear to hold, in particular, relatively richer countries contribute more and those with greater fiscal needs, approximated by the importance of the agricultural sector, pay less. However, in the EU, an adjustment of net payments to changes in the actual importance of the spe-cific fiscal need for a country is lacking.Fiscal Equalisation, European Union

Fiscal Equalisation among the states in Germany

Germany's fiscal federalism has undergone a process of perpetual reform. On the one hand, some tax sources that have existed up to now – the corporate income tax is a good example in this context – will shortly be phased out because of changes in the system. On the other hand the judgement by the Constitutional Court has required a renewal of Germany's equalisation system. Besides an illustration of tax sharing between the three tiers of government, the main part of this paper deals with the equalisation among the 16 federal states. In the framework of the reforming process of the "Solidarity Pact IIW, the distribution of tax revenues, vertical grants and fiscal equalisation among the federal states were newly arranged.Fiscal Federalism, Grants, Fiscal Autonomy, Germany

A unified control strategy for inductor-based active battery equalisation schemes

© 2018 by the authors. Licensee MDPI, Basel, Switzerland. Series battery equalisation can improve battery charge and discharge reliability and extend battery life. Inductor-based battery equalisation schemes have the advantages of simple topologies and control strategies. According to the energy transfer pathway, inductor-based battery equalisation schemes can be divided into cell-to-cell and cell-to-pack equalisation schemes. The control strategies of the cell-to-cell schemes are simple; the inductor can only transfer energy between the neighbouring cells, so the equalisation speed is low. The cell-to-pack schemes are able to accomplish energy transfer between the cells and pack by charging and discharging the inductors. The equalisation speed is high, but the control strategies may be complex. In this paper, different equalisation topologies are reviewed, then a unified control strategy which is applicable to all of the inductor-based equalisation topologies is proposed. The equalisation speeds and efficiencies of these different schemes, including the newly-proposed unified control strategy, are analysed and compared. Based on the theoretical analysis, simulations, and experimental verifications, it is concluded that this unified control strategy can perform the battery equalisation process quickly and efficiently

Symmetric Radial Basis Function Assisted Space-Time Equalisation for Multiple Receive-Antenna Aided Systems

This constribution considers nonlinear space-time equalisation (STE) designed for single-input multiple-output (SIMO) systems. By exploiting the inherent symmetry of the underlying optimal Bayesian STE solution, a novel symmetric radial basis function (RBF) based STE scheme is proposed, which is capable of achieving the optimal Bayesian equalisation performance. The adaptive adjustment of the STE taps of this symmetric RBF (SRBF) based STE can be achieved by estimating the SIMO channel encountered using the classic least mean square channel estimator and computing the optimal RBF centres from the resultant SIMO channel matrix estimate. Our simulation results demonstrate that the performance of this SRBF based STE is robust with respect to the choice of the algorithmic parameters