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The Institutions of Federalism: Toward an Analytical Framework

  • David E. Wildasin

    (University of Kentucky)

Mature federations have relatively transparent delineations of authority among levels of government; subnational governments enjoy considerable autonomy in their expenditure, revenue, and debt policies. In other countries, problems of soft budget constraints, bailouts, and fiscal and financial instability demonstrate the difficulties of institutional design in a federation. This paper outlines an analytical framework within which interjurisdictional spillovers may create incentives for higher-level governments to intervene in the control and financing of lower-level governments (bailouts). This framework helps to identify directions for theoretical and empirical research that can illuminate important features of observed institutions and guide policy analysis.

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Paper provided by EconWPA in its series Public Economics with number 0403006.

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Length: 28 pages
Date of creation: 29 Mar 2004
Date of revision:
Handle: RePEc:wpa:wuwppe:0403006
Note: Type of Document - pdf; pages: 28
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  13. Seitz, Helmut, 1999. "Subnational government bailouts in Germany," ZEI Working Papers B 20-1999, ZEI - Center for European Integration Studies, University of Bonn.
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  20. Teresa Garcia-MilĂ  & Timothy J. Goodspeed & Therese J. McGuire, 2001. "Fiscal decentralization policies and sub-national government debt in evolving federations," Economics Working Papers 549, Department of Economics and Business, Universitat Pompeu Fabra, revised May 2002.
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