The theory of fiscal federalism makes a strong case for decentralizing government functions in order to enhance the efficiency of allocating public goods where preferences differ among regions. Decentralized collective decision making fosters social and political cohesion at the level of the...

The paper discusses moral hazard problems as a potential reason for the observed strong increase of indebtedness of German states (Länder). Indeed, financial markets do not react much to the strong differences in fiscal fundamentals of German Länder. Using a case study, the paper also shows...

Cooperative federations are usually characterized by the existence of bailout guarantees and intergovernmental transfer schemes. This paper explores whether such features of cooperative federations lead to subnational soft budget constraints using panel data from the German States covering the...

This article explores the effect of sub-national tax autonomy and sub-national control over shared taxes on primary deficits with panel data for 23 OECD countries over the 1975-2000 period. The results suggest that sub-national tax autonomy has a U-shaped effect on primary deficits. We find that...

The purpose of this paper is to evaluate an effect of new fiscal rules in the Japanese prefectural government. Especially, we focus on creative accounting [von Hagen and Wolff (2006)] in the Law Relating to the Financial Soundness of Local Governments (2007, Law No. 94). We estimated the effect...

I study whether bailouts of local governments carry electoral benefits for state governments with a dataset covering 421 municipalities in the German state of Hesse over the period 1999-2011. I find that past bailouts have no economically significant effect on the municipality-level vote share...

The 1999-2006 versions of the Italian Domestic Stability Pact had many shortcomings and a modest impact with respect to the aim of aligning the fiscal behaviour of sub-national government units with the national commitments under the European Stability and Growth Pact. The Domestic Pact was...

In most Initial Public Offerings (IPO) in the world, the underwriter selects syndicate members and uses the information of their investors' clientele to set the offering price. The objective of this paper is to develop a model of the "book building" process in which the formation of the...

We show that in oligopolistic markets the social choice correspondence which selects all socially efficient outcomes is Nash implementable if the number of firms is at least two. Thus, monopoly regulation whenever consumers are favored by the designer or the society is the only framework, among...