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Fiscal federalism and risk sharing in Germany: the role of size differences
[Risikokonsolidierung im Rahmen des deutschen Länderfinanzausgleichs: die Rolle von Größenunterschieden]

Author

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  • Konrad, Kai A.
  • Seitz, Helmut
Abstract
We study the effect of size differences for an optimal risk sharing system of intergovernmental transfers in Germany. The German fiscal transfer system should account for the fact that an optimal insurance mechanism has the property that smaller states contribute a smaller share of their tax revenue to the redistribution mechanism.

Suggested Citation

  • Konrad, Kai A. & Seitz, Helmut, 2001. "Fiscal federalism and risk sharing in Germany: the role of size differences [Risikokonsolidierung im Rahmen des deutschen Länderfinanzausgleichs: die Rolle von Größenunterschieden]," Discussion Papers, Research Unit: Market Processes and Governance FS IV 01-20, WZB Berlin Social Science Center.
    • Handle: RePEc:zbw:wzbmpg:fsiv0120
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    References listed on IDEAS

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    1. Richard A. Musgrave, 1961. "Approaches to a Fiscal Theory of Political Federalism," NBER Chapters, in: Public Finances: Needs, Sources, and Utilization, pages 97-134, National Bureau of Economic Research, Inc.
    2. Cornes, Richard C. & Silva, Emilson C. D., 2000. "Local Public Goods, Risk Sharing, and Private Information in Federal Systems," Journal of Urban Economics, Elsevier, vol. 47(1), pages 39-60, January.
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    Cited by:

    1. Robin Boadway, 2004. "The Theory and Practice of Equalization," CESifo Economic Studies, CESifo Group, vol. 50(1), pages 211-254.

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    More about this item

    Keywords

    Fiscal federalism; risk sharing; size asymmetry;
    All these keywords.

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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