Size and Soft Budget Constraints
AbstractThere is much evidence against the so-called "too big to fail" hypothesis in the case of bailouts to sub-national governments. We look at a model where districts of di_erent size provide local public goods with positive spillovers. Matching grants of a central government can induce socially-e_cient provision, but districts can still exploit the intervening central government by inducing direct _nancing. We show that the ability of a district to induce a bailout from the central government and district size are negatively correlated.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Kentucky, Institute for Federalism and Intergovernmental Relations in its series Working Papers with number 2006-13.
Length: 36 pages
Date of creation: Nov 2006
Date of revision:
bailouts; soft-budget constraints; jurisdictional size; public goods; spillovers;
Other versions of this item:
- Crivelli, Ernesto & Staal, Klaas, 2006. "Size and soft budget constraints," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 172, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Ernesto Crivelli & Klaas Staal, 2006. "Size and Soft Budget Constraints," CESifo Working Paper Series 1858, CESifo Group Munich.
- H4 - Public Economics - - Publicly Provided Goods
- H7 - Public Economics - - State and Local Government; Intergovernmental Relations
- R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-12-01 (All new papers)
- NEP-PBE-2006-12-01 (Public Economics)
- NEP-URE-2006-12-01 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David E. Wildasin, 2001.
"Externalities and Bailouts: Hard and Soft Budget Constraints in Intergovernmental Fiscal Relations,"
- Wildasin, David E., 1997. "Externalities and bailouts : hard and soft budget constraints in intergovernmental fiscal relations," Policy Research Working Paper Series 1843, The World Bank.
- Jürgen Von Hagen & Massimo Bordignon & Bhajan S. Grewal & Per Peterson & Helmut Seitz & Matz Dahlberg, 2000. "Subnational Government Bailouts in OECD Countries: Four Case Studies," Research Department Publications 3100, Inter-American Development Bank, Research Department.
- Alberto Alesina & Enrico Spolaore, 1995.
"On the Number and Size of Nations,"
NBER Working Papers
5050, National Bureau of Economic Research, Inc.
- Pettersson-Lidbom, Per & Dahlberg, Matz, 2003. "An Empirical Approach for Evaluating Soft Budget Constraints," Working Paper Series 2003:28, Uppsala University, Department of Economics.
- Seitz, Helmut, 1999. "Subnational government bailouts in Germany," ZEI Working Papers B 20-1999, ZEI - Center for European Integration Studies, University of Bonn.
- Inman, Robert P, 1995. "How to Have a Fiscal Crisis: Lessons from Philadelphia," American Economic Review, American Economic Association, vol. 85(2), pages 378-83, May.
- Qian, Yingyi & Roland, Gerard, 1998.
"Federalism and the Soft Budget Constraint,"
American Economic Review,
American Economic Association, vol. 88(5), pages 1143-62, December.
- Massimo Bordignon, 2000. "Problems of Soft Budget Constraints in Intergovernmental Relationships: The Case of Italy," Research Department Publications 3099, Inter-American Development Bank, Research Department.
- Mariano Tommasi & Pablo Sanguinetti, 2003.
"Intergovernmental Transfers and Fiscal Behavior: Insurance versus Aggregate Discipline,"
60, Universidad de San Andres, Departamento de Economia, revised Aug 2003.
- Sanguinetti, Pablo & Tommasi, Mariano, 2004. "Intergovernmental transfers and fiscal behavior insurance versus aggregate discipline," Journal of International Economics, Elsevier, vol. 62(1), pages 149-170, January.
- Juan Pablo Nicolini & Josefina Posadas & Juan Sanguinetti & Pablo Sanguinetti & Mariano Tommasi, 2002. "Decentralization, Fiscal Discipline in Sub-National Governments and the Bailout Problem: The Case of Argentina," Research Department Publications 3160, Inter-American Development Bank, Research Department.
- Eric S. Maskin, 1999. "Recent Theoretical Work on the Soft Budget Constraint," American Economic Review, American Economic Association, vol. 89(2), pages 421-425, May.
- Kornai, Janos, 1986. "The Soft Budget Constraint," Kyklos, Wiley Blackwell, vol. 39(1), pages 3-30.
- Ernesto Crivelli, 2012.
"Local governments’ fiscal balance and privatization in transition countries,"
The Economics of Transition,
The European Bank for Reconstruction and Development, vol. 20(4), pages 677-703, October.
- Ernesto Crivelli, 2012. "Local Governmentsâ€™ Fiscal Balance, Privatization, and Banking Sector Reform in Transition Countries," IMF Working Papers 12/146, International Monetary Fund.
- Hikaru Ogawa & David E. Wildasin, 2009.
"Think Locally, Act Locally: Spillovers, Spillbacks, and Efficient Decentralized Policymaking,"
American Economic Review,
American Economic Association, vol. 99(4), pages 1206-17, September.
- Hikaru Ogawa & David Wildasin, 2007. "Think Locally, Act Locally: Spillovers, Spillbacks, and Efficient Decentralized Policymaking," Working Papers 2007-06, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
- Hikaru Ogawa & David E. Wildasin, 2007. "Think Locally, Act Locally: Spillovers, Spillbacks, and Efficient Decentralized Policymaking," CESifo Working Paper Series 2142, CESifo Group Munich.
- Dufrénot, G. & Frouté, P. & Schalck, C., 2010. "The French Regions’ Borrowing Behaviours. How heterogeneous are they?," Working papers 289, Banque de France.
- Rosella Levaggi, 2009.
"From local to global public goods: how should externalities be represented?,"
0903, University of Brescia, Department of Economics.
- Levaggi, Rosella, 2010. "From local to global public goods: How should externalities be represented?," Economic Modelling, Elsevier, vol. 27(5), pages 1040-1042, September.
- Wildasin, David E., 2007.
"Pre–Emption: Federal Statutory Intervention in State Taxation,"
National Tax Journal,
National Tax Association, vol. 60(3), pages 649-62, September.
- David Wildasin, 2007. "Pre-Emption: Federal Statutory Intervention in State Taxation," Working Papers 2007-05, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
- Serhan Cevik, 2011. "Policy Coordination in Fiscal Federalism: Drawing Lessons from the Dubai Debt Crisis," IMF Working Papers 11/147, International Monetary Fund.
- Christos Kotsogiannis & Robert Schwager, 2006.
"Fiscal Equalization and Yardstick Competition,"
2006-15, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (David E. Wildasin).
If references are entirely missing, you can add them using this form.