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Kleine Bundesländer: Achillesferse des Föderalismus?

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  • Müller, Andreas
  • Fricke, Holger
  • Berthold, Norbert

Abstract

In this article we examine whether or not the small size (in terms of population) of some German Laender (states) is harmful. The economic theory of federalism forms the ground on which we present empirical evidence, focusing on our own results for the German Laender. We find evidence that political decisions on federal level instead of Laender level cause pref-erence costs, and so do decisions in big or merged Laender. On the other hand, economies of scale as an assumed advantage of big jurisdictions obviously do not influence the economic outcome very much. We do not find indications for strategic behaviour due to external effects either. Nonetheless, if external effects are regarded as a problem concerning ?Stadtstaaten?, they should rather be internalised by horizontal negotiations than by other instruments such as vertical payments or mergers between Laender. Hence, mergers of Laender do not seem to be a necessary precondition for decentralisation, which in turn is advisable as our results show.

Suggested Citation

  • Müller, Andreas & Fricke, Holger & Berthold, Norbert, 2006. "Kleine Bundesländer: Achillesferse des Föderalismus?," Discussion Paper Series 91, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
  • Handle: RePEc:zbw:wuewwb:91
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    1. Lars P. Feld & Gebhard Kirchgässner & Christoph A. Schaltegger, 2004. "Fiscal Federalism and Economic Performance: Evidence from Swiss Cantons," Marburg Working Papers on Economics 200420, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    2. Buchanan, James M. & Goetz, Charles J., 1972. "Efficiency limits of fiscal mobility: An assessment of the tiebout model," Journal of Public Economics, Elsevier, vol. 1(1), pages 25-43, April.
    3. Baicker, Katherine, 2005. "The spillover effects of state spending," Journal of Public Economics, Elsevier, vol. 89(2-3), pages 529-544, February.
    4. Berthold, Norbert & Fricke, Holger & Kullas, Matthias, 2005. "Standortwettbewerb der Bundesländer," Discussion Paper Series 80, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    5. Feld, Lars P, 2000. "Tax Competition and Income Redistribution: An Empirical Analysis for Switzerland," Public Choice, Springer, vol. 105(1-2), pages 125-164, October.
    6. Hirsch, Werner Z & Marcus, Morton J, 1969. "Intercommunity Spillovers and the Provision of Public Education," Kyklos, Wiley Blackwell, vol. 22(4), pages 641-660.
    7. Robert P. Inman & Daniel L. Rubinfeld, 1997. "Rethinking Federalism," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 43-64, Fall.
    8. Starrett, David A, 1980. "On the Method of Taxation and the Provision of Local Public Goods," American Economic Review, American Economic Association, vol. 70(3), pages 380-392, June.
    9. Kirchgassner, Gebhard & Pommerehne, Werner W., 1996. "Tax harmonization and tax competition in the European Union: Lessons from Switzerland," Journal of Public Economics, Elsevier, vol. 60(3), pages 351-371, June.
    10. Berthold, Norbert & Fricke, Holger, 2006. "Small is beautiful: Kleine Gebietskörperschaften erfüllen die politischen Präferenzen besser!," Discussion Paper Series 90, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    11. Homburg, Stefan, 1997. "Hat die Währungsunion Auswirkungen auf die Finanzpolitik?," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 93-108.
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