State-owned enterprises, fiscal transparency, and the circumvention of fiscal rules

The case of Germany

Bibliographic Data

ID11309274
AuthorsFriedrich Heinemann (0000-0003-3501-0199, Centre for European Economic Research, corresponding author), Justus Nover (0000-0003-0722-312X, Centre for European Economic Research), Paul Steger (Centre for European Economic Research)
Year2025
Volume86
Pages102633
Publication date2025-01-01
Open AccessYes
TypeARTICLE
VenueEuropean Journal of Political Economy (JOURNAL)
Journal identifiersISSN: 0176-2680 • E-ISSN: 1873-5703
PublisherElsevier BV (PUBLISHER)
DOI10.1016/j.ejpoleco.2024.102633
OpenAlexW4405590915
LanguageEN
References cited22

State-owned enterprises (SOEs) provide opportunities for a more flexible and market-based provision of public services. At the same time, they may impair fiscal transparency and offer politicians discretion in the presence of strict fiscal rules if these only constrain the core budget. Using a comprehensive micro-data set of German SOEs, this paper studies a possible impact of the German debt brake on SOEs by tracking changes in financial indicators at the firm level that would hint to a circumvention of the rule. The identification exploits that the mounting compliance pressures over the lagged implementation of the debt brake from 2010 to 2020 differs across the 16 states. The results show that SOEs in fiscally more constrained states exhibit a stronger decrease in equity and reserves and a higher increase in debt compared to SOEs in less constrained states and the shorter the distance to the 2020 deadline. This result is based on a combined sample of state and municipal SOEs, a finding pointing towards the vertical spillover of a fiscal rule

Business · Economics · Fiscal policy · Macroeconomics · Political science · Computer Science · European Monetary and Fiscal Policies · Fiscal Policies and Political Economy · Local Government Finance and Decentralization

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