The political economy of the German Länder deficits
Jochimsen, Beate ;  Nuscheler, Robert ;  Universität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft

Main titleThe political economy of the German Länder deficits
AuthorJochimsen, Beate
AuthorNuscheler, Robert
InstitutionUniversität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft
No. of Pages31 S.
Series Diskussionsbeiträge des Fachbereichs Wirtschaftswissenschaft ; 2005/6 : Volkswirtschaftliche Reihe
Keywordspublic debt, political economy, German Länder, dynamic panel data model
Classification (DDC)330 Economics
Also published in
AbstractWe analyze the deficits of the German Länder for the period from 1960 to 2000
and test a number of hypotheses derived from the literature on the political economy
of public expenditures and public deficits. Estimating a dynamic panel data model,
we find evidence for political opportunism of the Rogoff/Sibert-type. German voters
seem to favor fiscal discipline as debt issue is significantly lower in pre-election years.
There is no evidence for partisan behavior. Party ideology thus plays a negligible
role. As suggested by the theory, coalition governments issue more debt. This effect
is, however, not statistically significant. If the probability of reelection is small, the
incumbent government may find it beneficial to issue more debt. We consider four
different approximations of the reelection probability but find evidence for none of
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FU DepartmentDepartment Business and Economics
Year of publication2005
Type of documentBook
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Created at2008-06-20 : 07:35:39
Last changed2015-01-22 : 04:40:13
Static URLhttp://edocs.fu-berlin.de/docs/receive/FUDOCS_document_000000000343