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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/10419/25903
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| Title: | | Size and soft budget constraints  |
| Authors: | | Crivelli, Ernesto Staal, Klaas |
| Issue Date: | | 2006 |
| Series/Report no.: | | CESifo working paper 1858 |
| Abstract: | | There is much evidence against the so-called too big to fail hypothesis in the case of bailouts to sub-national governments. We look at a model where districts of different size provide local public goods with positive spillovers. Matching grants of a central government can induce socially-efficient provision, but districts can still exploit the intervening central government by inducing direct financing. We show that the ability of a district to induce a bailout from the central government and district size are negatively correlated. |
| JEL: | | H4 H7 R1 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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