Soft Budget Constraints in German Fiscal Federalism: Lessons for Fiscal Governance

Dr. Björn Gehrmann

doi:10.5771/9783845226484

Summary

Der Finanzföderalismus zeichnet sich durch eine inhärente Ineffizienz aus, die gerade in den letzten zwei Jahrzehnten besonders sichtbar wurde: nachlässige Budgetbeschränkungen. Der Band trägt zur Erforschung des Finanzföderalismus mit der Absicht bei, die Erwartungen an subnationale Rettungsprogramme zu erklären und kosteneffiziente Lösungen zu empfehlen.

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Bibliographic data

Edition: 1/2010
Copyright Year: 2010
ISBN-Print: 978-3-8329-5885-5
ISBN-Online: 978-3-8452-2648-4
Publisher: Nomos, Baden-Baden
Series: Neue Studien zur Politischen Ökonomie
Volume: 9
Language: English
Pages: 225
Product Type: Monograph

Titelei/Inhaltsverzeichnis No access Pages 2 - 26
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    1. Authors:
      1. The Decentralization Theorem No access
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      2. Optimal Jurisdictional Size No access
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      3. Interjurisdictional Spillovers and Intergovernmental Grants No access
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      4. Institutional Congruence No access
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    2. Positive Vertical FGT: Competition among Tiers No access
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    3. Normative Horizontal FGT: Locational Efficiency No access
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    4. Positive Horizontal FGT: Competition among Jurisdictions No access
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    5. Summary No access
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      1. Methodological Individualism No access
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      2. Transaction Costs No access
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      3. Property Rights No access
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      4. Agency Costs No access
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      5. Incomplete contracts No access
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    2. The ‘Industrial Organization’ of States No access
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    3. Federal Governance No access
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      1. Accountability and Spillovers No access
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      2. Innovation No access
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    5. Positive Vertical SGT: Yardstick Competition No access
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    6. Normative Horizontal SGT: Coasian Contracts No access
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    7. Positive Horizontal SGT: Yardstick Competition No access
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    8. Summary No access
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  3. Interim Summary: Towards Evolutionary Federalism No access Pages 64 - 66
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2. 1. Federalism in the Basic Law No access Pages 66 - 70
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    1. Three-tiered system No access
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      1. Legislative No access
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      2. Executive No access
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      3. Judiciary No access
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    3. Vertical Federal Solidarity No access
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    1. Equality of the Länder No access
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    2. Horizontal Federal Solidarity No access
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      1. The Principle of Connexity No access
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      2. The Principle of Budgetary Autonomy (Art. 109 GG) No access
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      3. The Division of Fiscal Competences (Art. 105 GG) No access
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      4. Borrowing Restrictions (Art. 115 GG) No access
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      1. The Länder level: Interstate Equalization No access
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      2. The Municipal Level: Intrastate Equalization No access
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  5. No Bankruptcy of Corporations under Public Law No access Pages 88 - 89
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    1. Centralization No access
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    2. Institutional Incongruence No access
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    3. The Soft Budget Constraint No access
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    4. Incentive Distortion: Inter- and Intrastate Equalization No access
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  7. Interim Summary: German Federalism – Stable, Static and Stagnating No access Pages 95 - 98
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1. 1. The Soft Budget Constraint: Definition and Rationale No access Pages 99 - 103
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    1. The Bailout Game No access
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      1. The Model No access
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      2. Systemic Relevance No access
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      3. Deficit Sensitivity No access
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      4. Return on Political Investment No access
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      5. Two Fictitious Calculations No access
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  3. The Market-Induced Soft Budget Constraint No access Pages 127 - 130
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    1. International Financial Crises No access
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    2. Authors:
      1. Federal Tier: Sovereign Bankruptcy No access
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      2. Länder Tier: State Bankruptcy No access
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      3. Municipal Tier: Municipal Bankruptcy No access
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      1. The German Länder No access
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        Calculation for Brandenburg (with and without Berlin) No access
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      3. Application to the Private Sector: Firm and Bank Bailouts No access
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  5. Interim Summary: Size Matters No access Pages 145 - 148
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    1. Corporate vs. Public Sources of Finance No access
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    2. Corporate vs. Public Financial Management No access
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    3. Summary: Similarities and Differences No access
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    1. The Separation of Ownership and Control No access
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    2. The Agency Costs of Equity: Overinvestment No access
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    3. The Separation of Liability and Control No access
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    4. The Agency Costs of Debt: Underinvestment and Overborrowing No access
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    5. Summary: The Equivalence of Firms and Governments in Germany No access
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    1. Corporate Governance: Definition and Rationale No access
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      1. Bonuses No access
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      2. Stock Options No access
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      1. Dilution No access
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      2. Concentration No access
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    4. Control regimes No access
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    5. Liability regimes No access
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    6. Regulatory regimes No access
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    1. From Corporate Governance to Fiscal Governance No access
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    2. Fiscal Governance: Definition and Rationale No access
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      1. Performance-based bonuses No access
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      2. Rating-based bonuses No access
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      1. Dilution No access
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      2. Concentration No access
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      1. Coalition Decision No access
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      2. Parliamentary Impeachment No access
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      1. Receivership No access
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      2. Bailout No access
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      3. Public Bankruptcy No access
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      4. Abolition of Debt Financing No access
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    7. Authors:
      1. ‘National Stability Pact’ No access
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      2. Constitutional Debt Brake No access
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      3. Balanced Budget Rule No access
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      4. Lending Ceilings No access
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  5. Interim Summary: Agency Cost-Effective Governance No access Pages 188 - 190
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    1. Reward Regimes: Performance-Based Pay No access
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    2. Control Regimes: Coalition Decision and Impeachment No access
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    1. Ownership Regimes: Reform of Political Geography No access
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    2. Liability Regimes: Alignment of Liability and Control No access
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  3. Six Reform Scenarios No access Pages 195 - 197
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  4. Interim Summary: Good Fiscal Governance No access Pages 197 - 198
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    1. Federal Reform Commission II No access
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    2. Party Positions No access
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    3. Reform of Federal Political Geography No access
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    4. Reform of Municipal Political Geography No access
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    5. Alignment of Liability and Control No access
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    1. Spatial Voting Models No access
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    2. The Political Economy of the Alignment of Liability and Control No access
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    3. The Political Economy of a Reform of Federal Geography No access
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    4. The Results of the Federal Reform Commission II No access
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  3. Interim Summary: Germany’s Agency Cost-Ineffective Federalism No access Pages 209 - 210
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Concluding Remarks No access Pages 211 - 214
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Literature No access Pages 215 - 225
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