Next Article in Journal
Online Gradient Descent for Kernel-Based Maximum Correntropy Criterion
Previous Article in Journal
Entropy Analysis of Carbon Nanotubes Based Nanofluid Flow Past a Vertical Cone with Thermal Radiation
Previous Article in Special Issue
The Arbitrarily Varying Relay Channel
Article Menu

Export Article

Open AccessArticle

Information Theory and an Entropic Approach to an Analysis of Fiscal Inequality

Business and Economics Research Group, Ho Chi Minh City Open University, Ho Chi Minh City 70000, Viet Nam
Entropy 2019, 21(7), 643; https://doi.org/10.3390/e21070643
Received: 8 April 2019 / Revised: 26 May 2019 / Accepted: 13 June 2019 / Published: 28 June 2019
  |  
PDF [603 KB, uploaded 3 July 2019]
  |  

Abstract

In his influential study, Theil (1967) developed the notion of entropy on the basis of information theory. He then advocated the use of entropy-based measure for the analysis of income inequality. In this paper, the first of its kind, we apply Theil’s notion of entropy to public finances in multi-tiered governments, in particular for a measurement of fiscal decentralisation, which is currently very crude in terms of the ratio between local government revenue and total revenue. It is the claim of this paper that such an approach of measuring fiscal decentralisation completely ignores important distributional aspects of fiscal arrangements. Findings from this paper indicate that studies on measuring various aspects of fiscal activities—such as fiscal decentralisation—should carefully take into account the dispersion of revenue (and expenditure) across regions. On that basis, the entropic approach developed in this paper is able to accommodate these dispersions across subnational governments. As an illustration for the case of Vietnam, the true degree of fiscal decentralization has effectively been decreased in comparison with estimates from other simple measurements due to the presence of substantial dispersions of revenue and expenditure from the subnational governments across 63 provinces in Vietnam. View Full-Text
Keywords: entropy; dispersion; entropic approach; fiscal decentralisation; measurement entropy; dispersion; entropic approach; fiscal decentralisation; measurement
Figures

Figure 1

This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).
SciFeed

Share & Cite This Article

MDPI and ACS Style

Vo, D.H. Information Theory and an Entropic Approach to an Analysis of Fiscal Inequality. Entropy 2019, 21, 643.

Show more citation formats Show less citations formats

Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.

Related Articles

Article Metrics

Article Access Statistics

1

Comments

[Return to top]
Entropy EISSN 1099-4300 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
Back to Top