A Natural Debt Brake in the Fiscal Equalization Scheme

2007 ◽  
Author(s):  
Max Groneck ◽  
Robert C. Plachta
Keyword(s):  
Fiscal Equalization ◽  
Debt Brake

Sinnhaftigkeit und Effektivität der deutschen Schuldenbremse

2010 ◽  
Vol 11 (3) ◽  
pp. 226-245 ◽  
Author(s):  
Lars P. Feld
Keyword(s):  
Federal Government ◽  
Fiscal Consolidation ◽  
Fiscal Equalization ◽  
Public Finances ◽  
Debt Brake ◽  
Financial Conditions ◽  
Fiscal Equalization System

AbstractSince 2009 Germany has a new debt regime that requires the federal government to reduce its structural deficits to 0.35 percent of GDP until 2016 and the Länder to balance their budgets structurally until 2020. In this paper the rationale for a debt brake is discussed, the provisions of the new regime are summarized and its effectiveness is assessed. Although the new debt brake basically provides for a reasonable framework to achieve sustainable public finances, several loopholes remain that enable finance ministers to avoid fiscal consolidation. Particularly problematic are the provisions for the Länder which have incentives to appear excessively indebted until 2019 in order to negotiate better financial conditions in the fiscal equalization system that must be revised until 2019. These incentives may be stronger than the constitutional provision to reduce deficits.

Die Schuldenbremse im Finanzausgleich – Eine alternative Budgetregel für die Bundesländer

2008 ◽  
Vol 57 (3) ◽  
Author(s):  
Max Groneck ◽  
Robert C. Plachta
Keyword(s):  
Fiscal Federalism ◽  
Minimal Condition ◽  
Tax Revenue ◽  
Fiscal Equalization ◽  
Debt Brake ◽  
Fiscal Rule ◽  
Maastricht Criteria

AbstractExisting rules of debt limitation in the German fiscal federalism are insufficient. The minimal condition to a new national fiscal rule requires adherence to the Maastricht criteria. This paper analyses existing reform proposals discussed in the Föderalismuskommission II and proposes a new rule. The natural debt brake in the fiscal equalization simply considers new indebtedness in the fiscal power of the Lander. Two goals are achieved: The substitution of missing tax revenue by new debt will be moderated and at the same time a reduction of debt will be awarded.

scholarly journals Federalism, Grants, and Fiscal Equalization

1999 ◽  
Vol 52 (2) ◽  
pp. 239-260
Author(s):  
Peter Mieszkowski ◽  
Richard A. Musgrave
Keyword(s):  
Fiscal Equalization

FISCAL EQUALIZATION AND SCHOOL FINANCE

1994 ◽  
Vol 47 (1) ◽  
pp. 185-197 ◽  
Author(s):  
ANDREW RESCHOVSKY
Keyword(s):  
School Finance ◽  
Fiscal Equalization

scholarly journals Verbesserte Finanzbedarfsmessung im nordrhein-westfälischen Finanzausgleich und ihre Verteilungswirkungen

2018 ◽  
Vol 67 (2) ◽  
pp. 189-218
Author(s):  
Thomas Brenner ◽  
Thomas Döring
Keyword(s):  
Robust Regression ◽  
Status Quo ◽  
Recent Past ◽  
Time Stability ◽  
Fiscal Equalization ◽  
Alternative Approach ◽  
Parameter Variations ◽  
Regression Approach ◽  
The Status ◽  
Fiscal Equalization System

Abstract Within the local fiscal equalization system of North Rhine-Westphalia, anticipated financial needs of municipalities are estimated by the use of regression analysis. In the recent past the previously exercised regression approach shows unexpected results concerning the main parameters determining intra-system allocation of general grants. Against this background the paper analyses the reasons for these parameter variations in order to identify an alternative approach to achieve regression results with higher accuracy and time stability both of which are of particular importance from a fiscal equalization policy perspective. It will be shown that the so-called robust regression is such an alternative method which leads – in case of its implementation – to divergent distributional effects compared to the status quo.

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