It has long been acknowledged that governments may strategically use their tax and expenditure policies to attract mobile factors. A growing body of both theoretical and empirical research has demonstrated this to be the case. For instance, it is now widely believed that governments compete for cross-border shoppers through their sales and excise tax policy or for mobile capital by lowering corporate income tax rates. However, many of the existing studies of fiscal competition have focused on issues of horizontal tax competition - or how a state responds to changes in the tax policies of other states. This panel is comprised of research considering both horizontal and vertical tax competition which arises when different levels of government share the same base. Understanding how competition varies at different levels of government as well as the externalities created when different levels of government tax the same base is of great importance for those charged with the design of our tax and transfer systems. Together, this research seeks to extend the fiscal competition literature by considering competition over multiple tax and expenditure policies determined at more than one level of government. Papers in the session are empirical and use recent advances in spatial econometrics to better understand and quantify cross-jurisdiction and vertical policy responses. The policy instruments considered include sales taxes, income taxes, intergovernmental grants, and estate taxes. The first paper seeks to contribute to our knowledge on fiscal competition by comparing the United States and Canada in terms of vertical tax competition for both sales and income taxes. Competition between the federal government and states as well competition between states and their largest cities is examined. The second paper extends the literature by demonstrating that lower levels of governments will respond differently to higher levels of government depending on the local government’s geographic position within the federation. The third paper considers fiscal interaction when estimating the longstanding flypaper effect. Specifically, fiscal interaction over expenditures and own-revenues is considered, along with the informational externalities associated with federal grants awarded to neighboring states. The final paper examines how states strategically set their estate tax policy after the 2001 Economic Growth Recovery and Tax Relief Reconciliation Act which altered the longstanding relationship between state and federal estate tax policy.