Burret, Heiko T. Feld, Lars P. Köhler, Ekkehard A.
Year of Publication:
Freiburger Diskussionspapiere zur Ordnungsökonomik 15/09
This paper provides evidence that most German states (Laender) have unsustainable public finances by exploiting a newly compiled database covering the years 1950-2011. Although the Laender are closely intertwined we are the first to apply 'second generation' panel techniques that control for correlation among the Laender. A unique identification strategy for the selection of relevant sub-panels improves the robustness of the tests.