Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/96825
Authors: 
Potrafke, Niklas
Reischmann, Markus
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper 4716
Abstract: 
We examine whether US and German state governments pursue sustainable fiscal policies taking into account fiscal transfers. Using panel data techniques we investigate whether the debt-to-GDP ratio had a positive influence on the primary surplus (Bohn-model). We show that including/excluding fiscal transfers changes the results. If fiscal transfers are not included in the primary surplus, the test results do not indicate that the US and German state governments pursued sustainable fiscal policies. Our results also suggest that fiscal transfers were positively related with debt. These findings indicate that intergovernmental transfers have implicitly subsidized debts.
Subjects: 
fiscal sustainability
public debt
institutions
fiscal transfers
panel data
JEL: 
H72
H74
H77
C23
Document Type: 
Working Paper

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