Journal of Population Economics

, Volume 6, Issue 3, pp 199–214 | Cite as

Optimal demogrants and taxes in a federal welfare state

  • Ranian Ray


This paper provides a framework for the simultaneous calculation of optimal commodity and income taxes in a federal framework with demogrants. The optimal income tax rate is shown to depend on a range of demographic and economic variables. Alternative models of fiscal federalism are proposed, and their implications for optimal commodity taxes and demogrants considered. Illustrative empirical evidence on Indian data confirms sensitivity of tax magnitudes to federal specification, and to assumptions about resource transfer between the federal and provincial authorities.


Alternative Model Welfare State Economic Variable Indian Data Resource Transfer 
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Copyright information

© Springer-Verlag 1993

Authors and Affiliations

  • Ranian Ray
    • 1
  1. 1.Department of Economics, Delhi School of EconomicsDelhi UniversityDelhiIndia

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