Fiscal Federalism and Risk Sharing in Germany: The Role of Size Differences
WZB Markets and Politics Working Paper No. FS IV 01 – 20
22 Pages Posted: 22 Aug 2011
Date Written: November 1, 2001
We study the effect of size differences for an optimal risk sharing system of intergovernmental transfers in Germany. The German fiscal transfer system should account for the fact that an optimal insurance mechanism has the property that smaller states contribute a smaller share of their tax revenue to the redistribution mechanism.
Keywords: Fiscal federalism, risk sharing, size asymmetry
JEL Classification: D70, H41, H77
Suggested Citation: Suggested Citation