Fiscal Rules, Bailouts, and Reputation in Federal Governments

Language: English

Published by GRIN Verlag, GRIN Verlag Sep 2019, 2019

3668969132 / 9783668969131

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This item is printed on demand - Print on Demand Titel. Neuware -Seminar paper from the year 2019 in the subject Economics - Other, grade: 1.0, University of Mannheim (Department of Economics), course: Topics on Monetary Union, language: English, abstract: The question of why regions, that cooperate in a federal union, overborrow¿meaning that they issue more debt than would be beneficial from a point-of-view of intertemporal efficiency¿is of utmost relevance in many contexts. Traditionally, the role of fiscal rules (i.e. caps on debt issuance levels with punishment payments upon violation) has been emphasized in overcoming the root of the problem: that central authorities in federal unions cannot commit to not use their funds to bail out overindebted members at the expense of other members. Dovis & Kirpalani, however, ask an important question: what happens if the central authority also cannot commit to enforcing the fiscal rules In their paper, they show that if the central authority has a low reputation (i.e. low probability of enforcing the fiscal rules and the no-bailout-clause), fiscal rules are not only ineffective, but they can even lead to a higher debt issuance and exacerbate the overborrowing problem.This report aims at outlining Dovis & Kirpalani¿s reasoning for their central claim, thus sketching out their proofs and providing intuition for their results. Furthermore, a short assessment of their paper is provided, centering on validity and possible extensions.Books on Demand GmbH, Überseering 33, 22297 Hamburg 24 pp. Englisch.…

Seller Inventory # 9783668969131

Title
Fiscal Rules, Bailouts, and Reputation in Federal Governments
Author
Ulrich Roschitsch
Publisher
GRIN Verlag, GRIN Verlag Sep 2019
Publication year
2019
Condition
Neu
Binding
Taschenbuch
Language
English
ISBN 10
3668969132
ISBN 13
9783668969131
Item weight
51 grams
Dimensions
210x148x3 mm

buchversandmimpf2000

Emtmannsberg, BAYE, Germany

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