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Deutsche Bundesbank, Forschungszentrum, Frankfurt am Main >
Discussion Paper Series 1: Economic Studies, Deutsche Bundesbank >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/10419/19684
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| DC Field | | Value | | Language |
| dc.contributor.author | | Heppke-Falk, Kirsten H. | | en_US |
| dc.contributor.author | | Wolff, Guntram B. | | en_US |
| dc.date.accessioned | | 2009-01-28T16:01:59Z | | - |
| dc.date.available | | 2009-01-28T16:01:59Z | | - |
| dc.date.issued | | 2007 | | en_US |
| 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_US |
| dc.language.iso | | eng | | en_US |
| dc.relation.ispartofseries | | Discussion paper Series 1 / Volkswirtschaftliches Forschungszentrum der Deutschen Bundesbank 2007,07 | | en_US |
| dc.subject.jel | | F34 | | en_US |
| dc.subject.jel | | H6 | | en_US |
| dc.subject.jel | | H7 | | en_US |
| dc.subject.jel | | G14 | | en_US |
| dc.subject.jel | | G15 | | en_US |
| dc.subject.jel | | E62 | | en_US |
| dc.subject.ddc | | 330 | | en_US |
| dc.subject.keyword | | moral hazard | | en_US |
| dc.subject.keyword | | bail-out | | en_US |
| dc.subject.keyword | | sovereign bond spreads | | en_US |
| dc.subject.keyword | | fiscal federalism | | en_US |
| dc.subject.keyword | | Germany | | en_US |
| dc.subject.stw | | Länderfinanzen | | en_US |
| dc.subject.stw | | Öffentliche Schulden | | en_US |
| dc.subject.stw | | Öffentliche Anleihe | | en_US |
| dc.subject.stw | | Risikoprämie | | en_US |
| dc.subject.stw | | Finanzausgleich | | en_US |
| dc.subject.stw | | Moral Hazard | | en_US |
| dc.subject.stw | | Schätzung | | en_US |
| dc.subject.stw | | Deutschland | | en_US |
| dc.subject.stw | | Berlin | | en_US |
| dc.title | | Moral hazard and bail-out in fiscal federations: evidence for the German Länder | | en_US |
| dc.type | | Working Paper | | en_US |
| dc.identifier.ppn | | 528422030 | | en_US |
| dc.rights | | http://www.econstor.eu/dspace/Nutzungsbedingungen | | - |
| Appears in Collections: | | Discussion Paper Series 1: Economic Studies, Deutsche Bundesbank
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