The political economy of the German Länder deficits

Arbeitspapier

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.

Object Details

• Alternative title: Die politische Ökonomie der Budgetdefizite der deutschen Bundesländer
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WZB Discussion Paper ; No. SP II 2007-06

Classification and Topics

• Classification: Wirtschaft ; Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior ; Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General ; National Deficit; Surplus
• Subject: Public Deficit ; German Länder ; Political Economy ; Dynamic Panel ; Data Model

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Jochimsen, Beate ; Nuscheler, Robert
• Event: Veröffentlichung
• (who): Wissenschaftszentrum Berlin für Sozialforschung (WZB)
• (where): Berlin
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/51073
• Last update: 10.03.2025, 11:45 AM CET