EconStor >
Rheinische Friedrich-Wilhelms-Universität Bonn >
Zentrum für Europäische Integrationsforschung (ZEI), Universität Bonn >
ZEI Working Papers, Zentrum für Europäische Integrationsforschung, Universität Bonn >

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

http://hdl.handle.net/10419/46219
  
Title:Fiscal federalism in Germany: Stabilization and redistribution before and after unification PDF Logo
Authors:Hepp, Ralf
von Hagen, Jürgen
Issue Date:2010
Series/Report no.:ZEI-working paper B 02-2010
Abstract:We provide empirical estimates of the risk-sharing and redistributive properties of the German federal fiscal system based on data from 1970 until 2006, with special attention to the effects of German unification. We find that tax revenue sharing between the states and the federal government and the fiscal equalization mechanism (Länderfinanzausgleich) together reduce differences in per-capita state incomes by 37 percent during period 1970 to 1994. After the full integration of East German states into the mechanism in 1995, the redistributive effects increase slightly to about 39 percent. With respect to the insurance effect of the German fiscal system, our results indicate that the federal fiscal system offsets 47 percent of an asymmetric shock to state per-capita incomes. This effect has significantly decreased after the inclusion of the East German states in 1995. Furthermore, we find that the German fiscal system provides almost perfect insurance for state government budgets against asymmetric revenue shocks; also, its redistributive effect with regard to the tax resources available to state governments is very strong.
Subjects:Regional Risk-sharing
Fiscal Federalism
Monetary Union
JEL:H77
E63
F42
Document Type:Working Paper
Appears in Collections:ZEI Working Papers, Zentrum für Europäische Integrationsforschung, Universität Bonn

Files in This Item:
File Description SizeFormat
638548217.pdf431.85 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/46219

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