EconStor >
Rheinische Friedrich-Wilhelms-Universität Bonn >
Bonn Graduate School of Economics (BGSE), Universität Bonn >
Bonn Econ Discussion Papers, Bonn Graduate School of Economics (BGSE), Universität Bonn >

Please use this identifier to cite or link to this item:

Full metadata record

DC FieldValueLanguage
dc.contributor.authorCrivelli, Ernestoen_US
dc.description.abstractLocal 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.en_US
dc.relation.ispartofseriesBonn econ discussion papers 2006,24en_US
dc.subject.keywordFiscal federalismen_US
dc.subject.keywordsoft budget constraintsen_US
dc.subject.keywordlocal public investmenten_US
dc.subject.keywordsub-national borrowingen_US
dc.titleSub-National Optimal Budget Allocation and Borrowing under Soft Budget Constrainten_US
dc.typeWorking Paperen_US
Appears in Collections:Bonn Econ Discussion Papers, Bonn Graduate School of Economics (BGSE), Universität Bonn

Files in This Item:
File Description SizeFormat
bgse24_2006.pdf278.71 kBAdobe PDF
No. of Downloads: Counter Stats
Show simple item record
Download bibliographical data as: BibTeX

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.