Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82776
Authors: 
Lindahl, Erica
Westermark, Andreas
Year of Publication: 
2006
Series/Report no.: 
Working Paper, Department of Economics, Uppsala University 2006:5
Abstract: 
We analyze a model where the federal government provides risk sharing arrangements to municipalities investing in a local public good. The risk sharing arrangements are an income equalization system and a system allowing for a soft budget constraint, i.e., a bailout. Our main result is that a bailout system in combination with income equalization can be a more efficient risk sharing arrangement than an income equalization system only. Thus, the introduction of a bailout system is welfare improving.
Subjects: 
Bailout
Fiscal federalism
JEL: 
H72
H77
Document Type: 
Working Paper

Files in This Item:
File
Size
521.53 kB





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