Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25903
Authors: 
Crivelli, Ernesto
Staal, Klaas
Year of Publication: 
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

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