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Budget deficits as devices for appropriating extra funds: An investigation of sharing rules

Author

Listed:
  • Grepperud, Sverre

    (Institute of Health Management and Health Economics)

Abstract

This paper considers a model with a sponsor and several bureaus to analyse the role of sharing rules. Various incentives for budget overspending are identified; among them the overspending of budgets due to soft budget constraints. Four different sharing rules are also considered that differ with respect to their strategic properties and whether the share is exogenous or endogenous. The results show that sharing on the basis of egalitarian principles yields a lower budget deficit than sharing based upon relative deficits both in symmetric and asymmetric games. The ranking of deficits that follow from sharing based upon relative budgets and sharing that equalises ex-post debt ratios is shown to depend on the properties of the health production function.

Suggested Citation

  • Grepperud, Sverre, 2009. "Budget deficits as devices for appropriating extra funds: An investigation of sharing rules," HERO Online Working Paper Series 2002:11, University of Oslo, Health Economics Research Programme.
  • Handle: RePEc:hhs:oslohe:2002_011
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    File URL: http://www.hero.uio.no/publicat/2002/HERO2002_11.pdf
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    More about this item

    Keywords

    Budget deficits; bailouts; appropriating activities;
    All these keywords.

    JEL classification:

    • D29 - Microeconomics - - Production and Organizations - - - Other
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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