University of Hertfordshire

By the same authors


  • Patrizio Lecca
  • Peter McGregor
  • Kim Swales
  • Ya Yin
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Original languageEnglish
Pages (from-to)402-421
Number of pages20
JournalJournal of Regional Science
Early online date27 Feb 2014
Publication statusPublished - 2 Jun 2014


This paper explores the impact on aggregate economic activity in a small, open region of an income tax funded expansion in public consumption that has no direct supply-side effects. The conventional balanced budget multiplier produces an unambiguously positive macroeconomic stimulus, but the incorporation of negative competitiveness elements, through the operation of the local labor market, renders this positive outcome less certain. Simulation using a single-region Computable General Equilibrium (CGE) model for Scotland demonstrates that the creation of local amenity effects, and the extent to which these are incorporated into local wage bargaining, is central to the analysis.


This is the peer reviewed version of the following article: Patrizio Lecca, Peter G. McGregor, J. Kim Swales, and Ya Ping Yin, ‘BALANCED BUDGET MULTIPLIERS FOR SMALL OPEN REGIONS WITHIN A FEDERAL SYSTEM: EVIDENCE FROM THE SCOTTISH VARIABLE RATE OF INCOME TAX’, Journal of Regional Science, Vol. 54 (3): 402-421, June 2014, which has been published in final form at This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.

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