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Konrad, Kai A. and Seitz, Helmut (2001): Fiscal federalism and risk sharing in Germany. The role of size differences. WZB Discussion Paper

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We study the effect of size differences for an optimal risk sharing system of intergovernmental transfers in Germany. The German fiscal transfer system should account for the fact that an optimal insurance mechanism has the property that smaller states contribute a smaller share of their tax revenue to the redistribution mechanism.

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