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...

We build an infinite horizon equilibrium model of fiscal federation, where anticipation of transfers from the central government creates incentives for local governments to overborrow. Absent commitment, the central government over-transfers, which distorts the central-local distribution of...

This paper investigates one of the most important financial issues arising from a secession or a country partitioning namely the sharing of the national public debt. Extending Dr?ze's distributive neutrality condition, we use the generational accounting technique and propose a dynamic...

Die Staatsverschuldung der Bundesrepublik Deutschland betrug Ende des Jahres 2008 1 518 Milliarden Euro. Ein großer Teil dieser Schulden hat seinen Ursprung im deutschen Einigungsprozess, und zwar sowohl in der Übernahme von Altschulden der DDR als auch in der Kreditfinanzierung des...

This paper examines the ownership structure of eurozone public debt and the distributional consequences thereof. Through both a comparative perspective and an explorative case study of Italy, this paper asks two research questions. Firstly, it asks who holds government debt in Spain, France,...

In economic discussions, currency board systems are frequently described as arrangements with self-binding character to the monetary authorities by their strict rules and establishments by law. Hard pegs and especially currency boards are often seen as remedies to overcome economic and financial...

This paper explores the macroeconomics of fiscal austerity and deflation in an economy with public debt. A binding budget deficit cap destabilizes the economy by turning the government budget into an automatic destabilizer. Public debt helps maintain AD in the presence of deflation because...