The Institutions of Federalism: Toward an Analytical Framework

David Wildasin ()

Public Economics from EconWPA

Abstract: Mature federations have relatively transparent delineations of authority among levels of government; subnational governments enjoy considerable autonomy in their expenditure, revenue, and debt policies. In other countries, problems of soft budget constraints, bailouts, and fiscal and financial instability demonstrate the difficulties of institutional design in a federation. This paper outlines an analytical framework within which interjurisdictional spillovers may create incentives for higher-level governments to intervene in the control and financing of lower-level governments (bailouts). This framework helps to identify directions for theoretical and empirical research that can illuminate important features of observed institutions and guide policy analysis.

Keywords: federalism; bailouts; soft budget constraint; externalities (search for similar items in EconPapers)
JEL-codes: D6 D7 H (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe and nep-pke
Date: 2004-03-29
Note: Type of Document - pdf; pages: 28
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwppe:0403006

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