Fiscal Federalism And Public Debt Fiscal Instability Due To Multi Level Borrowing In A Model Of Neoclassical Growth "
Holger Kächelein ()
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Holger Kächelein: Faculty of Business Administration and Economics University of Tirana Tirana, Albania"
Analele Stiintifice ale Universitatii "Alexandru Ioan Cuza" din Iasi - Stiinte Economice (1954-2015), 2011, vol. 58, 123-132
A neoclassical growth model with constant saving rates, publicly provided services and public debt is used to analyse the impact of a federal structure. The main focus is on the existence and the stability of steady states. It is shown that the equilibrium in a federation with publicly provided services is more likely to be unstable than the equilibrium with public capital as a substitute. Moreover, only dynamic inefficient solutions are stable. Due to additional instability, the need for flexible vertical assignment of public functions is further stressed. "
Keywords: Public debt; fiscal federalism; growth; stability (search for similar items in EconPapers)
JEL-codes: E13 E62 H62 H74 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:aic:journl:y:2011:v:57:p:123-132
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