On age distribution of population,government expenditure and fiscal federalism

In this paper I build a simple model to analyze the consequences that population growth imposes on the relative needs of expenditure of governments in a fiscal federalism setup. I assume, first, that some government expenditure items can be classified according to the age of their recipient individuals and, second, that different levels of government are usually assigned different expenditure programs. The implication is that, for an initially given level of effective public good provision, changes in the size of population as well as in its age structure will influence the composition of public expenditure for different layers of administration in a different manner.I would like to thank Jordi Caballé, Ángel de la Fuente, Javier Gardeazabal, Federico Grafe, Juan Urrutia and Jesús Vázquez for their valuable comments and suggestions. Two anonymous referees helped improve the initial version. Remaining errors and shortcomings are my own responsibility. Financial support from UPV 035.321-HA090/92 and UPV 035.321-HA130/93 is gratefully acknowledged.