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(Un-)Sustinability of public finances in German Laender: A panel time series approach

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  • Burret, Heiko T.
  • Feld, Lars P.
  • Köhler, Ekkehard A.

Abstract

This paper provides evidence that most German states (Laender) have unsustainable public finances by exploiting a newly compiled database covering the years 1950-2011. Although the Laender are closely intertwined we are the first to apply 'second generation' panel techniques that control for correlation among the Laender. A unique identification strategy for the selection of relevant sub-panels improves the robustness of the tests.

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  • Burret, Heiko T. & Feld, Lars P. & Köhler, Ekkehard A., 2015. "(Un-)Sustinability of public finances in German Laender: A panel time series approach," Freiburg Discussion Papers on Constitutional Economics 15/09, Walter Eucken Institut e.V..
    • Handle: RePEc:zbw:aluord:1509
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    Cited by:

    1. Feld Lars P. & Reuter Wolf Heinrich & Yeter Mustafa, 2019. "Öffentliche Investitionen: Die Schuldenbremse ist nicht das Problem," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 20(4), pages 292-303, December.
    2. Martin Werding & Klaus Gründler & Benjamin Läpple & Robert Lehmann & Martin Mosler & Niklas Potrafke, 2020. "Sustainability of Public Finances: Does It Still Play a Role?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 73(09), pages 53-58, September.
    3. Lars P. Feld & Martin Beznoska & Oliver Holtemöller & Hans-Peter Burghof & Ulrike Neyer & Clemens Fuest & Friedrich Heinemann & Thomas König, 2020. "Record Debts to Combat Covid-19 Consequences – What Can the State Afford?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 73(08), pages 03-32, August.
    4. Lars P. Feld & Ekkehard A. Köhler & Julia Wolfinger, 2020. "Modeling fiscal sustainability in dynamic macro-panels with heterogeneous effects: evidence from German federal states," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(1), pages 215-239, February.
    5. Clemens Fuest & Klaus Gründler & Niklas Potrafke & Marcel Fratzscher & Alexander Kriwoluzky & Claus Michelsen & Michael Hüther & Peter Bofinger & Lars P. Feld & Wolf Heinrich Reuter, 2019. "Schuldenbremse — Investitionshemmnis oder Vorbild für Europa? [Debt Brake — Investment Barrier or Role Model for Europe?]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 99(5), pages 307-329, May.
    6. Klaus Gründler & Armin Hackenberger & Lukas Kähn & Remo Nitschke & Niklas Potrafke & Joachim Ragnitz, 2020. "Record Debt after Coronavirus – What about the Burden on German Länder Budgets?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 73(11), pages 40-49, November.
    7. Ripamonti, Alexandre, 2019. "Capital Structure Adjustments and Asymmetric Information," MPRA Paper 96936, University Library of Munich, Germany.
    8. Ludger Schuknecht & Christoph A. Schaltegger & Michele Salvi & Jan Schnellenbach & Thomas Lenk & Christian Bender & Mario Hesse & Gert G. Wagner & Stefan Korioth & Klaus Gründler & Philipp Heil & Nikl, 2021. "Debt Brake as a Bone of Contention: A Proven Instrument Even in Times of Crisis?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 74(04), pages 03-30, April.
    9. Feld, Lars P., 2018. "The quest for fiscal rules," Freiburg Discussion Papers on Constitutional Economics 18/09, Walter Eucken Institut e.V..
    10. Bury, Yannick & Feld, Lars P., 2020. "Fiscal federalism in Germany," Freiburg Discussion Papers on Constitutional Economics 20/4, Walter Eucken Institut e.V..
    11. Gebhard Kirchgässner, 2017. "The debt brake of the German states: a faulty design?," Constitutional Political Economy, Springer, vol. 28(3), pages 257-269, September.

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    More about this item

    Keywords

    Fiscal Sustainability; Federalism; Panel Cointegration; Cross Dependence;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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