PAUL ROTHSTEIN
Associate Professor of Economics
Contact Information for 2007-08:
Department of Economics, Duke University
213 Social Sciences Building, Box 90097
Durham, NC   27708

Email:  paul.rothstein@duke.edu or rstein@wustl.edu (either will work).

Cell phone:  314-922-1535
Duke office:  919-660-1829

Permanent Contact Information
Department of Economics
Washington University in St. Louis
One Brookings Drive
St. Louis, MO   63130
 
Education:


Economic analysis forces you to think about the incentives that all sides face in any transaction.  It sounds easy, but it takes practice.  Here I am practicing in Taipei.
 
     


Current Appointments:



Other Academic Appointments:



Course Web Sites:
 

Undergraduate:


Graduate:



Recent and Ongoing Work:
 







  • Up to Par?  Prices, Policies, and Players in the Market for State Tax Credits

  • Identifying the Impact of Foundation Spending on State Growth:  Geographic Focus and the 5% Rule (with Gary Hoover and Ji Yan)

State-local public sector economics has overlooked the growing importance of foundations in both providing public goods and redistributing income.  There is a wealth of data on foundation income, assets and spending available from the IRS and private sources.  There are many interesting hypotheses to test regarding the economic impact of foundation spending and the nature of public-philanthropic partnerships, in addition to the traditional questions about crowding out.

About two-thirds of all foundations exogenously focus their resources on a single state, either through bylaws or longstanding internal policies.  For our first project, my coauthors and I are using exogenous geographic focus and the diversified nature of foundation assets to identify the impact of foundation spending on state growth.  The value of net noncharitable-use assets is arguably a good instrument for spending given that the value of these assets is likely exogenous to state economic conditions and most foundations (the “nonoperating” ones) must have qualified expenditures of at least 5% of assets.  We are assembling ten years of foundation asset and expenditure data from the Statistics of Income subsample, aggregating to state level by year, and merging with a unique dataset we have for geographic focus.  If the results are encouraging, we will purchase complete data for all foundations in all years.

  • Fiscal Cooperation, Regional Attractiveness, and the Permission to Tax
This continues my theoretical work on local fiscal competition.  The fiscal competition literature examines the ways that the objectives of local governments, the tax instruments that are permitted, and the pattern of factor ownership determine the efficiency and distributional properties of the equilibria. 

My current work focuses on equilibrium tax structures in a model in which the tax bases that different regions are permitted to use are endogenous.  A critical feature of this model (and, in general, the models I favor) is that local public goods are essential to all agents, so taxes can be “too low” as well as “too high.”  I find that there are Nash equilibria in which owners of fixed factors can reduce fiscal competition in the second-stage choice of tax rates by implicitly cooperating in the first-stage choice of tax bases for each region.  There are, however, equilibria in which cooperation in the first stage does not occur if the owners of fixed factors are “too aggressive.”  In this case, they try to deny other regions the ability to tax in an attempt to handicap their ability to provide local public goods and thus their ability to compete for mobile factors of production.  The strategic thinking that emerges is relevant for understanding constitution making in federal systems, fiscal issues in the European Union, and the current controversy over whether the Scottish Parliament should have the permission to tax Scottish citizens.

  • Existence of Pure Strategy Nash Equilibrium in a Closed and General Model of Tax Competition
My co-authors



Most Cited Paper:
Order Restricted Preferences and Majority Rule, Social Choice and Welfare, Volume 7, No. 4 (1990), pp. 331-342.

Most Perplexingly Uncited Paper:
The Demand for Education with Power Equalizing Aid:  Estimation and Simulation, Journal of Public Economics, Volume 49, No. 2 (1992), pp. 135-162.



Miscellaneous
Last updated 2/27/08