Partial coordination in local debt policies

Abstract

This article compares several rules of coordinated debt policies to show that the central government intervention is not required to carry out an efficient local debt policy. The main argument is that a form of partial coordination results in the efficient outcome rather than a full coordination in local debt policies.

Keywords:

• local public debt
• migration
• partial coordination

JEL Classification:

• H41
• H71
• H74

Acknowledgement

This research was supported by grants from the Japan Society for the Promotion of Science (No. 20330055) and the Zengin Foundation for Studies on Economics and Finance.

Notes

¹See, for instance, Musgrave (1959), Daly (1969), Wagner (1970) and Bruce (1995).

²A full characterization of the model, containing mathematical derivation of the results, is available online as ERC Discussion Paper No. E11-1, Nagoya University.

³See Equation 4(4)′ in Bruce (1995).