A model is presented where universities competitively supply education to mobile students. Students are subject to a liquidity constraint so that tuition must be paid out of pre-university income. It is shown that student loans provided by home jurisdictions will ensure an efficient quality of...

Fiscal externalities arise if subsidies to higher education raise future net fiscal revenues. We investigate in which countries fiscal externalities provide a justification for increasing subsidies to higher education. First, we show that the marginal fiscal recovery rate, i.e. the ratio of the...