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On the politicization of intergovernmental fiscal relations in Germany after unification

Friedrich Schneider (), Hans Pitlik (), Harald Strotmann () and Günther Schmid
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Günther Schmid: State Ministry of Economics Baden-Württemberg, Germany

No 2001-05, Economics working papers from Department of Economics, Johannes Kepler University Linz, Austria

Abstract: A recent decision of the German Constitutional Court requires political decision makers to revise the system of intergovernmental transfers in order to limit free bargaining among state and federal government officials. The present paper provides empirical support for the thesis that political discretion has become increasingly important in the transfer negotiations after Unification. We attempt to show why political influences gained weight relative to economic considerations in the determination of net gains. This politicization of the fiscal transfer system appears to be a consequence of the inability of policy makers to agree on a fundamental reform in the early 1990's.

JEL-codes: D7 H77 (search for similar items in EconPapers)
Date: 2001-03
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