Fitness landscape and tax planning: NK model for fiscal federalism

Faggini, Marisa and Parziale, Anna (2011): Fitness landscape and tax planning: NK model for fiscal federalism.

Abstract

Economic models of Fiscal Federalism, according to different settings, are generally linear and static, offering unique and deterministic solutions starting with simplifying assumptions. This paper rises from the idea to investigate how the decision-makers, abandoning their traditional economic models and focusing, instead, the attention on innovative components of evolutionary economics, can achieve better performance results, to organize and to optimize an economic system based on Fiscal Federalism. For this purpose, Fiscal Federalism must be understood as a dense network of economic relationships between different complex adaptive and co-evolving systems, the jurisdictions, linked by strong interdependencies. A better understanding of the links between interdependence will be provided by the Kauffman’ NK-model. The relevance of the NK-model in the study of economic organizations has been detected several times in the literature. These studies, however, neglect the problem of co-evolution, which instead underpins this paper.

• Item Type: MPRA Paper
• Language: English
• Keywords: Evolutionary Economics, Fiscal Federalism, NK-model
• Subjects: H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H77 - Intergovernmental Relations ; Federalism ; Secession; B - History of Economic Thought, Methodology, and Heterodox Approaches > B5 - Current Heterodox Approaches > B52 - Institutional ; Evolutionary; H - Public Economics > H1 - Structure and Scope of Government > H11 - Structure, Scope, and Performance of Government

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