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Please use this identifier to cite or link to this item: http://dspace.mediu.edu.my:8181/xmlui/handle/10419/19684
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dc.creatorHeppke-Falk, Kirsten H.-
dc.creatorWolff, Guntram B.-
dc.date2007-
dc.date.accessioned2013-10-16T07:06:16Z-
dc.date.available2013-10-16T07:06:16Z-
dc.date.issued2013-10-16-
dc.identifierhttp://hdl.handle.net/10419/19684-
dc.identifierppn:528422030-
dc.identifierRePEc:zbw:bubdp1:5561-
dc.identifier.urihttp://koha.mediu.edu.my:8181/xmlui/handle/10419/19684-
dc.descriptionWe identify investor moral hazard in the German fiscal federation. Our identification strategy is based on a variable, which was used by the German Federal Constitutional Court as an indicator to determine eligibility of two German states (Länder) to a bail-out, the interest payments-to-revenue ratio. While risk premia measured in the German sub-national bond market react significantly to the relative debt level of a state (Land), we also find that a larger interest payments-to-revenue ratio counter-intuitively lowers risk premia significantly. Furthermore, with increasing values the risk premia decrease more strongly. This is evidence of investor moral hazard, because a larger indicator value increases the likelihood of receiving a bail-out payment. Quantitatively, the effects are, however, quite small. Our findings are robust to a variety of sample changes. In addition, we provide a case study of the recent Federal Constitutional Court ruling on the Land Berlin, which had filed for additional federal funds. The negative response of the court did not lead to a change in financial markets' bail-out expectations. In sum, our results indicate significant investor moral hazard in the sub-national German bond market.-
dc.languageeng-
dc.relationDiscussion paper Series 1 / Volkswirtschaftliches Forschungszentrum der Deutschen Bundesbank 2007,07-
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
dc.subjectF34-
dc.subjectH6-
dc.subjectH7-
dc.subjectG14-
dc.subjectG15-
dc.subjectE62-
dc.subjectddc:330-
dc.subjectmoral hazard-
dc.subjectbail-out-
dc.subjectsovereign bond spreads-
dc.subjectfiscal federalism-
dc.subjectGermany-
dc.subjectLänderfinanzen-
dc.subjectÖffentliche Schulden-
dc.subjectÖffentliche Anleihe-
dc.subjectRisikoprämie-
dc.subjectFinanzausgleich-
dc.subjectMoral Hazard-
dc.subjectSchätzung-
dc.subjectDeutschland-
dc.subjectBerlin-
dc.titleMoral hazard and bail-out in fiscal federations: evidence for the German Länder-
dc.typedoc-type:workingPaper-
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