The political economy of the German Länder deficits

Die politische Ökonomie der Budgetdefizite der deutschen Bundesländer

Beate Jochimsen and Robert Nuscheler

Discussion Papers, Research Unit: Market Processes and Governance from WZB Berlin Social Science Center

Abstract: We analyze the deficits of the German Länder for the period from 1960 to 2005 and test a number of hypotheses derived from the literature on the political economy of public deficits. Estimating a dynamic panel data model, we find evidence for political opportunism in the spirit of Rogoff and Sibert: German voters seem to favor fiscal discipline as debt issue is significantly lower in preelection years. As suggested by the theory, coalition governments issue significantly more debt than single party governments. There is no evidence for partisan behavior; party ideology plays a negligible role. Strategic debt issue may occur when the probability of reelection is small. Our results suggest that this kind of political instability has no impact on debt issue.

Keywords: Public Deficit; German Länder; Political Economy; Dynamic Panel; Data Model (search for similar items in EconPapers)
JEL-codes: D72 E60 H62 (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/51073/1/534563325.pdf (application/pdf)

Related works:
Working Paper: The Political Economy of the German Länder Deficits (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:wzbmpg:spii200706

Access Statistics for this paper

More papers in Discussion Papers, Research Unit: Market Processes and Governance from WZB Berlin Social Science Center Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().