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https://hdl.handle.net/10419/19684
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DC Field | Value | Language |
---|---|---|
dc.contributor.author | Heppke-Falk, Kirsten H. | en |
dc.contributor.author | Wolff, Guntram B. | en |
dc.date.accessioned | 2009-01-28T16:01:59Z | - |
dc.date.available | 2009-01-28T16:01:59Z | - |
dc.date.issued | 2007 | - |
dc.identifier.uri | http://hdl.handle.net/10419/19684 | - |
dc.description.abstract | We identify investor moral hazard in the German fiscal federation. Our identification strategy is based on a variable, which was used by the German Federal Constitutional Court as an indicator to determine eligibility of two German states (Länder) to a bail-out, the interest payments-to-revenue ratio. While risk premia measured in the German sub-national bond market react significantly to the relative debt level of a state (Land), we also find that a larger interest payments-to-revenue ratio counter-intuitively lowers risk premia significantly. Furthermore, with increasing values the risk premia decrease more strongly. This is evidence of investor moral hazard, because a larger indicator value increases the likelihood of receiving a bail-out payment. Quantitatively, the effects are, however, quite small. Our findings are robust to a variety of sample changes. In addition, we provide a case study of the recent Federal Constitutional Court ruling on the Land Berlin, which had filed for additional federal funds. The negative response of the court did not lead to a change in financial markets' bail-out expectations. In sum, our results indicate significant investor moral hazard in the sub-national German bond market. | en |
dc.language.iso | eng | en |
dc.publisher | |aDeutsche Bundesbank |cFrankfurt a. M. | en |
dc.relation.ispartofseries | |aDiscussion Paper Series 1 |x2007,07 | en |
dc.subject.jel | F34 | en |
dc.subject.jel | H6 | en |
dc.subject.jel | H7 | en |
dc.subject.jel | G14 | en |
dc.subject.jel | G15 | en |
dc.subject.jel | E62 | en |
dc.subject.ddc | 330 | en |
dc.subject.keyword | moral hazard | en |
dc.subject.keyword | bail-out | en |
dc.subject.keyword | sovereign bond spreads | en |
dc.subject.keyword | fiscal federalism | en |
dc.subject.keyword | Germany | en |
dc.subject.stw | Länderfinanzen | en |
dc.subject.stw | Öffentliche Schulden | en |
dc.subject.stw | Öffentliche Anleihe | en |
dc.subject.stw | Risikoprämie | en |
dc.subject.stw | Finanzausgleich | en |
dc.subject.stw | Moral Hazard | en |
dc.subject.stw | Schätzung | en |
dc.subject.stw | Deutschland | en |
dc.subject.stw | Berlin | en |
dc.title | Moral hazard and bail-out in fiscal federations: evidence for the German Länder | - |
dc.type | Working Paper | en |
dc.identifier.ppn | 528422030 | en |
dc.rights | http://www.econstor.eu/dspace/Nutzungsbedingungen | en |
dc.identifier.repec | RePEc:zbw:bubdp1:5561 | en |
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