Anreizwirkungen des Länderfinanzausgleichs: Ein alternatives Prämienmodell

The present paper introduces a simple alternative two-stage Premium Model to eliminate the distortionary and non-transparent deficits of the recent Premium Model in the federal financial equalization system in Germany. The premium amounts of the recent Premium Model directly influence the financial power within the federal financial equalization system. This method leads to downstream and non-transparent effects for the revenues of all German states as well as the Federal Government. The present paper proves by theoretical and empirical analyses of an alternative two-stage Premium Model the elimination of those effects and the higher transparency for the German states to calculate their own premium advantages.Received: May 15, 2008Accepted: January 9, 200