Intergovernmental Grants and Public Input Provision: Theory and Evidence from Germany

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URL:	http://ub-madoc.bib.uni-mannheim.de/1486
URN:	urn:nbn:de:bsz:180-madoc-14863
Document Type:	Working paper
Year of publication:	2007
The title of a journal, publication series:	None
Publication language:	English
Institution:	Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series:	Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject:	330 Economics
Classification:	JEL: H77 H72 ,
Subject headings (SWD):	Steuerpolitik , Steuergerechtigkeit , Öffentliche Förderung , Deutschland
Keywords (English):	Fiscal competition , Fiscal equalisation , Intergovernmental grants , Public expenditure , Germany
Abstract:	This paper uses a simple model of fiscal competition between local jurisdictions to analyse the impact of intergovernmental grants on the composition of public spending. We find that a higher degree of redistribution within a system of ”fiscal equalisation” coincides with a smaller overall share of spending on productivity-enhancing public inputs. Furthermore, in order to test the theoretical predictions, we carry out an empirical analysis based on a panel of German states. The results are consistent with the theoretical findings and support the existence of an incentive effect of intergovernmental grants on state expenditure policies.
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BASE: Hauptmeier, Sebastian

Google Scholar: Hauptmeier, Sebastian

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