Is It Is Or Is It Ain'T My Obligation? Regional Debt In A Fiscal Federation
This article studies the repayment of regional debt in a multiregion economy with a central authority: Who pays the obligation issued by a region? With commitment, the central government will use its economy-wide taxation power in support of its objective to smooth distortionary taxes and consumption across regions. Absent commitment, this tool of the central government may be exploited to induce it to bail out regional government deficits. We characterize the conditions under which bailouts occur and their welfare implications. In particular, we show when the gains from a federation may outweigh the welfare costs of a bailout. We use these insights to comment on actual fiscal relations in three quite different federations: the United States, the European Union, and Argentina. Copyright � (2008) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
If 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 49 (2008)
Issue (Month): 4 (November)
|Contact details of provider:|| Postal: |
Phone: (215) 898-8487
Fax: (215) 573-2057
Web page: http://www.econ.upenn.edu/ier
More information through EDIRC
|Order Information:|| Web: http://www.blackwellpublishing.com/subs.asp?ref=0020-6598 Email: |
References listed on IDEAS
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.:
- Chari, V.V. & Kehoe, Patrick J., 2007.
"On the need for fiscal constraints in a monetary union,"
Journal of Monetary Economics,
Elsevier, vol. 54(8), pages 2399-2408, November.
- V. V. Chari & Patrick J. Kehoe, 1998. "On the need for fiscal constraints in a monetary union," Working Papers 589, Federal Reserve Bank of Minneapolis.
- Russell Cooper & Hubert Kempf, 2004.
"Overturning Mundell: Fiscal Policy in a Monetary Union,"
Review of Economic Studies,
Wiley Blackwell, vol. 71(2), pages 371-396, 04.
- Russell Cooper & Hubert Kempf, 2004. "Overturning Mundell: Fiscal Policy in a Monetary Union," Review of Economic Studies, Oxford University Press, vol. 71(2), pages 371-396.
- Russell Cooper & Hubert Kempf, 2002. "Overturning Mundell: fiscal policy in a monetary union," Staff Report 311, Federal Reserve Bank of Minneapolis.
- Alfredo Cuevas, 2003. "Reforming Intergovernmental Fiscal Relations in Argentina," IMF Working Papers 03/90, International Monetary Fund.
- 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.
- Mariano Tommasi & Pablo Sanguinetti, 2003. "Intergovernmental Transfers and Fiscal Behavior: Insurance versus Aggregate Discipline," Working Papers 60, Universidad de San Andres, Departamento de Economia, revised Aug 2003.
- Jordi GalÌ & Roberto Perotti, 2003.
"Fiscal policy and monetary integration in Europe,"
CEPR;CES;MSH, vol. 18(37), pages 533-572, October.
- Galí, Jordi & Perotti, Roberto, 2003. "Fiscal Policy and Monetary Integration in Europe," CEPR Discussion Papers 3933, C.E.P.R. Discussion Papers.
- Jordi Gali & Roberto Perotti, 2003. "Fiscal Policy and Monetary Integration in Europe," NBER Working Papers 9773, National Bureau of Economic Research, Inc.
- Poterba, James M, 1996.
"Budget Institutions and Fiscal Policy in the U.S. States,"
American Economic Review,
American Economic Association, vol. 86(2), pages 395-400, May.
- James M. Poterba, 1996. "Budget Institutions and Fiscal Policy in the U.S. States," NBER Working Papers 5449, National Bureau of Economic Research, Inc.
- Canova, Fabio & Pappa, Evi, 2004.
"Does it Cost to be Virtuous? The Macroeconomic Effect of Fiscal Constraints,"
CEPR Discussion Papers
4747, C.E.P.R. Discussion Papers.
- Fabio Canova & Evi Pappa, 2006. "Does it Cost to be Virtuous? The Macroeconomic Effects of Fiscal Constraints," NBER Chapters, in: NBER International Seminar on Macroeconomics 2004, pages 327-370 National Bureau of Economic Research, Inc.
- Fabio Canova & Evi Pappa, 2004. "Does it cost to be virtuous? The macroeconomic effects of fiscal constraints," Economics Working Papers 926, Department of Economics and Business, Universitat Pompeu Fabra, revised Dec 2004.
- Fabio Canova & Evi Pappa, 2005. "Does it cost to be virtuous? The macroeconomic effects of fiscal constraints," LSE Research Online Documents on Economics 526, London School of Economics and Political Science, LSE Library.
- Fabio Canova & Evi Pappa, 2005. "Does it Cost to be Virtuous? The Macroeconomic Effects of Fiscal Constraints," NBER Working Papers 11065, National Bureau of Economic Research, Inc.
- Russell W. Cooper & Hubert Kempf., 2001. "Dollarization and the conquest of hyperinflation in divided societies," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Sum, pages 3-12.
- Sebastian M. Saiegh & Mariano Tommasi, 1999. "Why is Argentina’s Fiscal Federalism so Inefficient? Entering the Labyrinth," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 169-209, May.
- Carlos E. Zarazaga, 1993. "Hyperinflations and moral hazard in the appropriation of seigniorage," Working Papers 93-26, Federal Reserve Bank of Philadelphia.
- 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.
When requesting a correction, please mention this item's handle: RePEc:ier:iecrev:v:49:y:2008:i:4:p:1469-1504. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or ()
If references are entirely missing, you can add them using this form.