Funding source and soft budget constraint

Marie-Laure Breuillé (breuille@enesad.inra.fr), Thierry Madiès (thierry.madies@unifr.ch) and Emmanuelle Taugourdeau
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Marie-Laure Breuillé: EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique

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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)
Date: 2007
Note: View the original document on HAL open archive server: https://hal.science/hal-04139229v1
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Working Paper: Funding source and soft budget constraint (2007)
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