Bailouts in federations: Is a hard budget constraint always best?
成果类型：
Article
署名作者：
Besfamille, Martin; Lockwood, Ben
署名单位：
University of Warwick; Universidad Torcuato Di Tella
刊物名称：
INTERNATIONAL ECONOMIC REVIEW
ISSN/ISSBN：
0020-6598
DOI：
10.1111/j.1468-2354.2008.00490.x
发表日期：
2008
页码：
577-593
关键词：
摘要：
This article analyses hard and soft budget constraints in a federation, where there is a moral hazard problem between the central and the regional governments. Regional governments can avoid a bailout from the center by exerting costly effort. In this setting, a hard budget constraint is not always optimal because it can provide excessive incentives for high effort, and thus discourage investment that is socially efficient. Thus, a hard budget constraint can imply the opposite kind of inefficiency that emerges under a soft budget constraint, where the common pool problem can give rise to inefficiently low effort and overinvestment.
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