Resource title

Size and soft budget constraints

Resource image

image for OpenScout resource :: Size and soft budget constraints

Resource description

There is much evidence against the so-called too big to fail hypothesis in the case of bailouts to sub-national governments. We look at a model where districts of different size provide local public goods with positive spillovers. Matching grants of a central government can induce socially-efficient provision, but districts can still exploit the intervening central government by inducing direct financing. We show that the ability of a district to induce a bailout from the central government and district size are negatively correlated.

Resource author

Ernesto Crivelli, Klaas Staal

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/25903

Resource license

Adapt according to the presented license agreement and reference the original author.