@techreport{Crivelli2006National,
abstract = {Local governments have borrowed largely from the banking system to finance their deficits instead of responding to the rigors of bond markets. This paper analizes how sub-national governments optimally reallocate the provision of public goods and decide on borrowing, in a model where the banking system faces a soft budget constraint. In contrast with recent literature, sub-national governments allocate a higher (lower) than optimal amount of resources to consumption public goods (infrastructure investment) and overborrow if they expect the banking system to be bailed out. Controls on sub-national borrowing like the golden rule seem to be inefficient to avoid excesive indebtedness at state level.},
author = {Ernesto Crivelli},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {R5; H7; 330; Fiscal federalism; soft budget constraints; local public investment; sub-national borrowing},
language = {eng},
number = {2006,24},
title = {Sub-National Optimal Budget Allocation and Borrowing under Soft Budget Constraint},
type = {Bonn econ discussion papers},
url = {http://hdl.handle.net/10419/22969},
year = {2006}
}
