Fiscal federalism and public debt fiscal instability due to multi level borrowing in a model of neoclassical growth
Fiscal federalism and public debt fiscal instability due to multi level borrowing in a model of neoclassical growth
Author(s): Holger KächeleinSubject(s): Economic development, EU-Accession / EU-DEvelopment, Public Finances, Fiscal Politics / Budgeting
Published by: Editura Universităţii »Alexandru Ioan Cuza« din Iaşi
Keywords: Public debt; fiscal federalism; growth; stability;
Summary/Abstract: A neoclassical growth model with constant saving rates, publicly provided services and public debt is used to analyse the impact of a federal structure. The main focus is on the existence and the stability of steady states. It is shown that the equilibrium in a federation with publicly provided services is more likely to be unstable than the equilibrium with public capital as a substitute. Moreover, only dynamic inefficient solutions are stable. Due to additional instability, the need for flexible vertical assignment of public functions is further stressed.
Journal: Analele Ştiinţifice ale Universităţii »Alexandru Ioan Cuza« din Iaşi. Ştiinţe economice
- Issue Year: 58/2011
- Issue No: 1
- Page Range: 123-132
- Page Count: 10
- Language: English