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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/18955
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| Title: | | Interregional redistribution and budget institutions under asymmetric information  |
| Authors: | | Huber, Bernd Runkel, Marco |
| Issue Date: | | 2005 |
| Series/Report no.: | | CESifo working papers 1491 |
| Abstract: | | 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 budgetary 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. |
| Subjects: | | asymmetric information interregional redistribution borrowing rules |
| JEL: | | D82 H77 H74 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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