The dissertation consists of six self-contained chapters that are related to selected incentives in fiscal federalism by using the example of the federal system in Germany. The dissertation elaborates on political as well as fiscal incentives. Chapters 2 and 3 examine election cycles, based on...

Partisanship of state level politicians affect the impact of federal fiscal policy in the U.S. Using data from close gubernatorial elections, we find partisan differences in the marginal propensity to spend federal transfers since the early 1980's: Republican governors spend less. A New...

We build an infinite horizon equilibrium model of fiscal federation, where anticipation of transfers from the central government creates incentives for local governments to overborrow. Absent commitment, the central government over-transfers, which distorts the central-local distribution of...