Goodspeed, Timothy - In: International Tax and Public Finance 9 (2002) 4, pp. 409-421
expected votes by increasing transfers as regions borrow. This bail out of regional governments creates a regional soft budget … constraint and results in two incentive effects, a common pool effect on tax payments and an opportunity cost effect. The soft … budget constraint lowers the opportunity cost of borrowing for the region, but also increases the tax-cost since a portion of …
