|
EconStor >
Universität zu Köln >
Finanzwissenschaftliches Forschungsinstitut, Universität Köln >
FiFo Discussion Papers, Finanzwissenschaftliches Forschungsinstitut, Universität Köln >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/10419/29692
|
| | |
| Title: | | Intergovernmental grants and financial autonomy under asymmetric information  |
| Authors: | | Herold, Katharina |
| Issue Date: | | 2009 |
| Series/Report no.: | | FiFo-CPE discussion papers 09-2 |
| Abstract: | | This paper analyses and compares the efficiency of alternative incentive compatible grant schemes under asymmetric information relieving subnational governments of excessive debt burden. They allow intervention into local debt, local tax or complete local fiscal policy. In the first case, separation of types can be induced by forcing recipients to inefficient high borrowing and in the second case by imposing inefficient high tax rates. In the last case, fiscal policy of the recipient region is distorted in the period of the exogenous shock. We show that constraining complete financial autonomy leads to the lowest welfare losses. This is due to the fact that complete regulation of local fiscal policy reduces the incentive of contributing local governments to defect from truthful relevation. |
| Subjects: | | vertical transfers subnational debt asymmetric information adverse selection financial autonomy |
| JEL: | | H74 H77 D82 |
| Document Type: | | Working Paper |
| Appears in Collections: | | FiFo Discussion Papers, Finanzwissenschaftliches Forschungsinstitut, Universität Köln
|
| |
| | |
Download bibliographical data as:
BibTeX
|
| |
Share on:http://hdl.handle.net/10419/29692
|
Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.
|