Funding source and soft budget constraint

Marie-Laure Breuillé (), Thierry Madiès and Emmanuelle Taugourdeau

No 2007-12, EconomiX Working Papers from University of Paris Nanterre, EconomiX

Abstract: This paper analyses the impact of funding source of the bailout on the softness of the regional budget constraint. We show that the funding source of the bailout has a considerable impact both on the credibility of the federal government's commitment and on the regional opportunistic behaviour. By choosing the adequate tax tool, the federal government turns out to be able to limit the soft budget constraint phenomenon.

Keywords: Tax Competition; Soft Budget Constraint; Fiscal Federalism (search for similar items in EconPapers)
JEL-codes: E62 H7 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2007
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Funding source and soft budget constraint (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:drm:wpaper:2007-12

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