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Navigating Solidarity: A case study of German fiscal equalisation from 1995 until 2022

Delhaas, Pauwel Casimir LU (2023) EOSK12 20231
Department of Economic History
Abstract
This thesis entails a case study of German fiscal equalisation from 1995 until 2022, taking the accession of the former East German Länder into the system as a starting point. Using data from German government bodies, this case study examines the success of the equalisation efforts in Germany by considering three dimensions: convergence of living standards, the rigidity of roles, and moral hazard behaviour in Länder fiscal budgeting. It employs descriptive statistics and data visualisation to draw inferences. The case study presents mixed results regarding the occurrence of convergence in living standards across the Länder during the analysed period. Furthermore, it reveals rigid contributor/beneficiary dynamics, indicating a persistent... (More)
This thesis entails a case study of German fiscal equalisation from 1995 until 2022, taking the accession of the former East German Länder into the system as a starting point. Using data from German government bodies, this case study examines the success of the equalisation efforts in Germany by considering three dimensions: convergence of living standards, the rigidity of roles, and moral hazard behaviour in Länder fiscal budgeting. It employs descriptive statistics and data visualisation to draw inferences. The case study presents mixed results regarding the occurrence of convergence in living standards across the Länder during the analysed period. Furthermore, it reveals rigid contributor/beneficiary dynamics, indicating a persistent fiscal burden on contributors and resembling transfer dependency by beneficiaries. The case study uncovers fiscally imprudent behaviour by several net beneficiaries, providing plausible indications of moral hazard prior to the implementation of the debt brake in 2020. Lastly, the case study establishes the debt brake on the Länder level has significantly improved the German fiscal federalist system by eliminating excessive public indebtedness in the Länder. The results of this case study are relevant to other nations, confederations, federations, and other types of unions using transfer systems based on solidarity. (Less)
Please use this url to cite or link to this publication:
author
Delhaas, Pauwel Casimir LU
supervisor
organization
course
EOSK12 20231
year
type
M2 - Bachelor Degree
subject
keywords
Germany, fiscal equalisation, fiscal federalism, Länderfinanzausgleich, moral hazard
language
English
id
9133521
date added to LUP
2023-08-30 08:51:25
date last changed
2023-08-30 08:51:25
@misc{9133521,
  abstract     = {{This thesis entails a case study of German fiscal equalisation from 1995 until 2022, taking the accession of the former East German Länder into the system as a starting point. Using data from German government bodies, this case study examines the success of the equalisation efforts in Germany by considering three dimensions: convergence of living standards, the rigidity of roles, and moral hazard behaviour in Länder fiscal budgeting. It employs descriptive statistics and data visualisation to draw inferences. The case study presents mixed results regarding the occurrence of convergence in living standards across the Länder during the analysed period. Furthermore, it reveals rigid contributor/beneficiary dynamics, indicating a persistent fiscal burden on contributors and resembling transfer dependency by beneficiaries. The case study uncovers fiscally imprudent behaviour by several net beneficiaries, providing plausible indications of moral hazard prior to the implementation of the debt brake in 2020. Lastly, the case study establishes the debt brake on the Länder level has significantly improved the German fiscal federalist system by eliminating excessive public indebtedness in the Länder. The results of this case study are relevant to other nations, confederations, federations, and other types of unions using transfer systems based on solidarity.}},
  author       = {{Delhaas, Pauwel Casimir}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Navigating Solidarity: A case study of German fiscal equalisation from 1995 until 2022}},
  year         = {{2023}},
}