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Subnational government bailouts in Germany

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  • Seitz, Helmut
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    Abstract

    The paper presents an investigation of subnational government bailouts in Germany. In a first part we briefly describe the fiscal federalism system in Germany. The main part of the paper examines the bailout of two West German states. We identify the causes of the financial trouble of both states and examine the institutional settings that forced the federal government to provide bailout transfers. In addition, we investigate the impact these transfers had on the fiscal performance of both Länder. In a further section we provide evidence on bailouts of local governments by the German Länder. A final section summarizes our results and presents policy conclusions. --

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    Bibliographic Info

    Paper provided by ZEI - Center for European Integration Studies, University of Bonn in its series ZEI Working Papers with number B 20-1999.

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    Date of creation: 1999
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    Handle: RePEc:zbw:zeiwps:b201999

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    1. Stuart Landon & Constance E. Smith, 2000. "Government debt spillovers and creditworthiness in a federation," Canadian Journal of Economics, Canadian Economics Association, vol. 33(3), pages 634-661, August.
    2. Homburg, Stefan, 1996. "Notwendigkeit einer Finanzreform," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 336-338.
    3. Kornai, Janos, 1986. "The Soft Budget Constraint," Kyklos, Wiley Blackwell, vol. 39(1), pages 3-30.
    4. von Hagen, Jurgen & Eichengreen, Barry, 1996. "Federalism, Fiscal Restraints, and European Monetary Union," American Economic Review, American Economic Association, vol. 86(2), pages 134-38, May.
    5. Homburg, Stefan, 1994. "Anreizwirkungen des deutschen Finanzausgleichs," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 312-330..
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    Cited by:
    1. Ernesto Crivelli & Klaas Staal, 2006. "Size and Soft Budget Constraints," CESifo Working Paper Series 1858, CESifo Group Munich.
    2. Thiess Buettner & Robert Schwager & Sebastian Hauptmeier, 2011. "Efficient Revenue Sharing and Upper-Level Governments: Theory and Application to Germany," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 167(4), pages 647-667, December.
    3. Breuillé, Marie-Laure & Vigneault, Marianne, 2010. "Overlapping soft budget constraints," Journal of Urban Economics, Elsevier, vol. 67(3), pages 259-269, May.
    4. Emanuel Kohlscheen, 2008. "Debt Bailouts And Constitutions," Economic Inquiry, Western Economic Association International, vol. 46(3), pages 480-492, 07.
    5. Baskaran, Thushyanthan, 2011. "Soft budget constraints and strategic interactions in subnational borrowing: Evidence from the German States, 1975-2005," MPRA Paper 32537, University Library of Munich, Germany.
    6. Berthold, Norbert & Fricke, Holger & Kullas, Matthias, 2004. "Mehr institutioneller Wettbewerb in Deutschland: Wirksame Hilfe für die neuen Bundesländer," Wirtschaftswissenschaftliche Beiträge 73, Julius-Maximilians-Universität Würzburg, Lehrstuhl für Volkswirtschaftslehre, insbes. Wirtschaftsordnung und Sozialpolitik.
    7. Heppke-Falk, Kirsten H. & Wolff, Guntram B., 2007. "Moral hazard and bail-out in fiscal federations: evidence for the German Länder," Discussion Paper Series 1: Economic Studies 2007,07, Deutsche Bundesbank, Research Centre.
    8. Ernesto Crivelli & Klaas Staal, 2013. "Size, spillovers and soft budget constraints," International Tax and Public Finance, Springer, vol. 20(2), pages 338-356, April.
    9. Lars P. Feld, 2004. "Le fédéralisme financier en Allemagne: Coopération ou concurrence?," Marburg Working Papers on Economics 200416, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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