IDEAS home Printed from https://ideas.repec.org/p/zbw/vfsc13/80044.html
   My bibliography  Save this paper

Will the German Debt Brake Succeed? Survey Evidence from State Politicians

Author

Listed:
  • Streif, Frank
  • Heinemann, Friedrich
  • Janeba, Eckhard
  • Schröder, Christoph

Abstract

The present paper analyzes expectations of German politicians about the German debt brake (Schuldenbremse), which became part of the German constitution in 2009. This fiscal rule requires the federal government and the German states to run a (cyclically adjusted) budget deficit of no more than 0.35% of GDP starting in 2016 and zero % starting in 2020, respectively. We use unique survey data from more than 630 politicians at the state level to systematically study the subjective beliefs in the compli-ance and desirability of the debt brake. We find that i) state politicians who belong to the coalition parties of the current federal government coalition believe more strongly in federal government compliance, ii) state politicians who belong to the party of the current state government believe more strongly in the own state s compliance, iii) worse state fiscal conditions and stronger beliefs in lack of credible enforcement of the debt brake lower the perceived likelihood of compliance, iv) there often is a large discrepancy in the assessed probability of compliance between politicians from the own state vs. politicians from other states, v) beliefs into the consequences of non-compliance with the debt brake are quite heterogeneous, and vi) politicians often find the debt brake more desirable than probable.

Suggested Citation

  • Streif, Frank & Heinemann, Friedrich & Janeba, Eckhard & Schröder, Christoph, 2013. "Will the German Debt Brake Succeed? Survey Evidence from State Politicians," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80044, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc13:80044
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/80044/1/VfS_2013_pid_714.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Timothy Goodspeed, 2002. "Bailouts in a Federation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 9(4), pages 409-421, August.
    2. repec:mpr:mprres:4937 is not listed on IDEAS
    3. Janeba, Eckhard & Osterloh, Steffen, 2012. "Tax and the city: A theory of local tax competition and evidence for Germany," ZEW Discussion Papers 12-005, ZEW - Leibniz Centre for European Economic Research.
    4. Buchanan, James M., 1994. "Lagged implementation as an element in constitutional strategy," European Journal of Political Economy, Elsevier, vol. 10(1), pages 11-26, May.
    5. Stanley L. Winer & Hirofumi Shibata (ed.), 2002. "Political Economy and Public Finance," Books, Edward Elgar Publishing, number 2805.
    6. Marco Battaglini, 2009. "On the Case for a Balanced Budget Amendment to the U.S. Constitution," 2009 Meeting Papers 131, Society for Economic Dynamics.
    7. Heinemann Friedrich & Janeba Eckhard, 2011. "Viewing Tax Policy Through Party-Colored Glasses: What German Politicians Believe," German Economic Review, De Gruyter, vol. 12(3), pages 286-311, August.
    8. Janeba, Eckhard & Osterloh, Steffen, 2013. "Tax and the city — A theory of local tax competition," Journal of Public Economics, Elsevier, vol. 106(C), pages 89-100.
    9. Friedrich Heinemann, 2010. "Eine Gabe an St. Nimmerlein?– Zur zeitlichen Dimension der Schuldenbremse," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 11(3), pages 246-259, August.
    10. repec:mpr:mprres:4780 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Virkola, Tuomo, 2014. "Fiscal Federalism in Four Federal Countries," ETLA Reports 38, The Research Institute of the Finnish Economy.
    2. Yeter, Mustafa & Heinemann, Friedrich, 2014. "The effects of fiscal rules on public finances and their identification," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100425, Verein für Socialpolitik / German Economic Association.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Heinemann, Friedrich & Janeba, Eckhard & Schröder, Christoph & Streif, Frank, 2016. "Fiscal rules and compliance expectations – Evidence for the German debt brake," Journal of Public Economics, Elsevier, vol. 142(C), pages 11-23.
    2. Eckhard Janeba, 2012. "Germany´s New Debt Brake: A Blueprint for Europe?," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 68(4), pages 383-405, December.
    3. Tidiane Ly, 2018. "Sub-metropolitan tax competition with household and capital mobility," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(5), pages 1129-1169, October.
    4. Pete Maniloff & Dale T. Manning, 2015. "Division of Nonrenewable Resource Rents: A Model of Asymmetric Nash Competition with State Control of Heterogeneous Resources," Working Papers 2015-08, Colorado School of Mines, Division of Economics and Business.
    5. Gaigné, Carl & Riou, Stéphane & Thisse, Jacques-François, 2016. "How to make the metropolitan area work? Neither big government, nor laissez-faire," Journal of Public Economics, Elsevier, vol. 134(C), pages 100-113.
    6. Janeba, Eckhard & Osterloh, Steffen, 2013. "Tax and the city — A theory of local tax competition," Journal of Public Economics, Elsevier, vol. 106(C), pages 89-100.
    7. Johan Lundberg, 2021. "Horizontal interactions in local personal income taxes," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 67(1), pages 27-46, August.
    8. Feld, Lars P. & Frey, Christian & Schaltegger, Christoph A. & Schmid, Lukas A., 2021. "Fiscal federalism and income inequality: An empirical analysis for Switzerland," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 463-494.
    9. Yu, Jihai & Zhou, Li-An & Zhu, Guozhong, 2016. "Strategic interaction in political competition: Evidence from spatial effects across Chinese cities," Regional Science and Urban Economics, Elsevier, vol. 57(C), pages 23-37.
    10. Hayato Kato & Hirofumi Okoshi, 2022. "Economic Integration And Agglomeration Of Multinational Production With Transfer Pricing," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(3), pages 1325-1355, August.
    11. de Paula, Aureo & Rasul, Imran & Souza, Pedro, 2018. "Identifying Network Ties from Panel Data: Theory and an Application to Tax Competition," CEPR Discussion Papers 12792, C.E.P.R. Discussion Papers.
    12. Borck, Rainald & Fossen, Frank M. & Freier, Ronny & Martin, Thorsten, 2015. "Race to the debt trap? — Spatial econometric evidence on debt in German municipalities," Regional Science and Urban Economics, Elsevier, vol. 53(C), pages 20-37.
    13. Mariana Lopes da Fonseca, 2017. "Tax Mimicking in Local Business Taxation: Quasi-experimental Evidence from Portugal," CESifo Working Paper Series 6647, CESifo.
    14. von Schwerin, Axel & Buettner, Thiess, 2016. "Constrained Tax Competition – Empirical Effects of the Minimum Tax Rate on the Tax Rate Distribution," VfS Annual Conference 2016 (Augsburg): Demographic Change 145642, Verein für Socialpolitik / German Economic Association.
    15. Thushyanthan Baskaran, 2021. "The revenue and base effects of local tax hikes: evidence from a quasi-experiment," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(6), pages 1472-1518, December.
    16. Blesse, Sebastian & Doerrenberg, Philipp & Rauch, Anna, 2019. "Higher taxes on less elastic goods? Evidence from German municipalities," Regional Science and Urban Economics, Elsevier, vol. 75(C), pages 165-186.
    17. Benny Geys & Steffen Osterloh, 2013. "Borders As Boundaries To Fiscal Policy Interactions? An Empirical Analysis Of Politicians’ Opinions On Rivals In The Competition For Firms," Journal of Regional Science, Wiley Blackwell, vol. 53(4), pages 583-606, October.
    18. Carsten Eckel & Yutao Han & Kate Hynes & Jin Zhang, 2021. "Structural fund, endogenous move and commitment," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(2), pages 465-482, April.
    19. Matthieu Chtioui Cepn & Nadine Levratto, 2020. "Fiscalité locale et dynamique d'emploi des territoires : analyse empirique sur les communes françaises (Version preprint) A paraitre dans la Revue d'Economie Régionale et urbaine, 2021," Working Papers halshs-02901499, HAL.
    20. Feld Lars P. & Baskaran Thushyanthan, 2010. "Federalism, Budget Deficits and Public Debt: On the Reform of Germany's Fiscal Constitution," Review of Law & Economics, De Gruyter, vol. 6(3), pages 365-393, December.

    More about this item

    JEL classification:

    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:vfsc13:80044. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/vfsocea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.