CIRJE-F-422 | "Soft-Budget Constraints and Local Expenditures" |
Author Name | Doi, Takero and Toshihiro Ihori |
Date | May 2006 |
Full Paper | PDF file@ |
Remarks | @ |
Abstract |
This paper investigates how the soft budget constraint with grants from the
central government to local governments tends to exaggerate inefficient local
expenditures. We first develop a theoretical model, which explains soft budget
problem in a multi-government setting. We then show that in Japan's case local
governments implemented inefficient public investments and hence the bad
outcome of soft budget problem occurred in the 1990s.
|