Schuldenanstieg und Haftungsausschluss im deutschen Föderalstaat: Zur Rolle des Moral Hazard
[Increasing debt and potential bail-out clauses in the German federation: on the role of moral hazard]
The paper discusses moral hazard problems as a potential reason for the observed strong increase of indebtedness of German states (Länder). Indeed, financial markets do not react much to the strong differences in fiscal fundamentals of German Länder. Using a case study, the paper also shows that this has not changed with the recent Berlin ruling. Overall, it therefore appears to be worthwhile to consider a reform that would entail stronger involvement of investors into risk of individual states. However, it is unlikely that this would prevent the build-up of large debt positions and compensate for the deficit bias of fiscal policy. Strict fiscal rules still appear necessary.
|Date of creation:||2007|
|Date of revision:|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Charles Wyplosz, 2005. "Fiscal Policy: Institutions versus Rules," National Institute Economic Review, National Institute of Economic and Social Research, vol. 191(1), pages 64-78, January.
- Wyplosz, Charles, 2002. "Fiscal Policy: Institutions versus Rules," CEPR Discussion Papers 3238, C.E.P.R. Discussion Papers.
- Kirsten H. Heppke-Falk & Guntram B. Wolff, 2008.
"Moral Hazard and Bail-Out in Fiscal Federations: Evidence for the German Länder,"
Wiley Blackwell, vol. 61(3), pages 425-446, 08.
- Heppke-Falk, Kirsten H. & Wolff, Guntram B., 2007. "Moral hazard and bail-out in fiscal federations: evidence for the German Länder," Discussion Paper Series 1: Economic Studies 2007,07, Deutsche Bundesbank, Research Centre.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:11248. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.