Dynamic Commitment and the Soft Budget Constraint: An Empirical Test
| Autor: | Per Pettersson-Lidbom |
|---|---|
| Rok vydání: | 2010 |
| Předmět: | |
| Zdroj: | American Economic Journal: Economic Policy. 2:154-179 |
| ISSN: | 1945-774X 1945-7731 |
| DOI: | 10.1257/pol.2.3.154 |
| Popis: | This paper develops an empirical framework for the problem of soft budgets which is explicitly based on a dynamic commitment problem, i.e., the inability of a supporting organization to commit itself not to extend more re sources ex post to a budget-constrained organization than it was prepared to provide ex ante . Swedish local governments are used as a testing ground since the central government provide d 1,408 discretionary fiscal transfers to local governments during the period 1979 to 1992. T he estimated soft-budget effect is economically significant: on average, a local gover nment increases its debt by more than 20 percent, or about 3.5 percent of total personal inc ome, by going from a hard to a soft budget constraint. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
|