|Huber, Bernd; Runkel, Marco (2008): Interregional redistribution and budget institutions under asymmetric information. In: Journal of Public Economics, Vol. 92, No. 12: pp. 2350-2361|
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Empirical evidence from the U.S. and the European Union suggests that regions which contribute to interregional redistribution face weaker borrowing constraints than regions which benefit from interregional redistribution. This paper presents an argument in favor of such differentiated budget institutions. It develops a two period model of a federation consisting of two types of regions. The federal government redistributes from one type of regions (contributors) to the other type (recipients). It is shown that a fiscal constitution with lax budget rules for contributors and strict budget rules for recipients solves the self selection problem the federal government faces in the presence of asymmetric information regarding exogenous characteristics of the regions.
Economics > Chairs > Chair in Public Finance
|Subjects:||300 Social sciences > 330 Economics|
|Deposited On:||15. Apr 2014 08:50|
|Last Modified:||29. Apr 2016 09:16|
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Interregional redistribution and budget institutions under asymmetric information. (deposited 15. Apr 2014 08:50)
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