Citation

Discussion Paper Details

Please find the details for DP2662 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Regional Risksharing and Redistribution in the German Federation

Author(s): Ralf Hepp and Jürgen von Hagen

Publication Date: January 2001

Keyword(s): Fiscal Federalism, Monetary Union and Regional Risk-Sharing

Programme Area(s): International Macroeconomics and Public Economics

Abstract: We provide empirical estimates of the risksharing and redistributive properties of fiscal equalization among the states of the German federation. Fiscal equalization serves as a mechanism to insure state budgets against asymmetric revenue shocks, but provides almost no insurance against regional income shocks. Equalization responds only weakly to income differentials but strongly to tax revenue differentials across states. A further result is that the correlation of state tax revenues with state GDPs has declined over time. This may reflect a weakening in state tax efforts in response to the adverse incentive effects of fiscal equalization.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2662

Bibliographic Reference

Hepp, R and von Hagen, J. 2001. 'Regional Risksharing and Redistribution in the German Federation'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2662