Federal Fiscal Constitutions: Risk Sharing and Moral Hazard
研究两级政府联邦中财政政策的集体选择，分析风险分担与道德风险之间的权衡，并对比欧盟与美国等不同财政宪法下的激励与政治均衡。
We study the collective choice of fiscal policy in a federation with two levels of government. Local policy redistributes across individuals and affects the probability of aggregate shocks, whereas federal policy shares international risk. There is a tradeoff between risk-sharing and moral hazard: federal risk-sharing may induce local governments to enact policies that increase local risk. We analyze this tradeoff under alternative fiscal constitutions. In particular, we contrast a vertically ordered system like the EC with a horizontally ordered federal system like the US. Alternative arrangements create different incentives for policymakers and voters, and give rise to different political equilibria. Under appropriate institutions, centralization of functions and power can mitigate the moral hazard problem.