Our paper identiï¬es a potential problem with decentralization at a time when its virtues are widely extolled. We show that responsibility for equalization at multi-levels within a decentralized federation creates an overlapping equalization policy that can worsen ï¬scal discipline. Contrary...

This paper presents empirical work grounded in the soft budget-constraint (SBC) literature. A loan is soft when a bank cannot commit the enterprise to hold to a fixed initial budget and/or the timing of repayment. Using data collected by the European Bank for Reconstruction (EBERD) (Business...

This paper presents empirical work grounded in the soft budget-constraint literature. A loan is soft when a bank cannot commit the enterprise to hold to a fixed initial budget and/or the timing of repayment. Using data collected by the EBRD (BEEPS 2002) in 26 transition economies, we analyze the...