Federal subsidization of state expenditure to reduce political budget cycles

• In this note, we analyze whether a federal transfer system can be designed to increase welfare when state governments create political budget cycles. The results show how the federal government can counteract the welfare costs of these cycles, without hindering politicians from signaling their type, by announcing a transfer scheme to subsidize expenditures that voters do not consider when voting.

Ämnesord

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv -- Nationalekonomi (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business -- Economics (hsv//eng)

Nyckelord

Political economy

Intergovernmental transfer

Budget cycle

nationalekonomi

Economics

Publikations- och innehållstyp

ref (ämneskategori)

art (ämneskategori)