Funding source and soft budget constraint
AbstractThis paper analyses the impact of funding source of the bailout on the softness of the regional budget constraint. We show that the funding source of the bailout has a considerable impact both on the credibility of the federal government's commitment and on the regional opportunistic behaviour. By choosing the adequate tax tool, the federal government turns out to be able to limit the soft budget constraint phenomenon.
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Bibliographic InfoPaper provided by University of Paris West - Nanterre la Défense, EconomiX in its series EconomiX Working Papers with number 2007-12.
Length: 23 pages
Date of creation: 2007
Date of revision:
Tax Competition; Soft Budget Constraint; Fiscal Federalism;
Find related papers by JEL classification:
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H7 - Public Economics - - State and Local Government; Intergovernmental Relations
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- Pettersson-Lidbom, Per & Dahlberg, Matz, 2003. "An Empirical Approach for Evaluating Soft Budget Constraints," Working Paper Series, Uppsala University, Department of Economics 2003:28, Uppsala University, Department of Economics.
- Plachta, Robert C., 2008. "Fiscal Equalisation and the Soft Budget Constraint," FiFo Discussion Papers - Finanzwissenschaftliche DiskussionsbeitrÃ¤ge 08-8, University of Cologne, FiFo Institute for Public Economics.
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