Interregional redistribution and budget institutions under asymmetric information

• 成果类型: Article; Proceedings Paper
• 署名作者: Huber, Bernd; Runkel, Marco
• 署名单位: University of Munich
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2008.01.008
• 发表日期: 2008
• 页码: 2350-2361
• 关键词: Asymmetric information; Interregional redistribution; Borrowing rules

摘要

Empirical evidence from the U.S. and the European Union suggests that regions which contribute to interregional redistribution face weaker borrowing constraints than regions which benefit from interregional redistribution. This paper presents an argument in favor of such differentiated budget institutions. It develops a two period model of a federation consisting of two types of regions. The federal government redistributes from one type of regions (contributors) to the other type (recipients). It is shown that a fiscal constitution with lax budget rules for contributors and strict budget rules for recipients solves the self selection problem the federal government faces in the presence of asymmetric information regarding exogenous characteristics of the regions. (C) 2008 Elsevier B.V. All rights reserved.