Subjective Beliefs as Determinants of Fiscal Policy: Survey Evidence from German Politicians

Guest Instructor: 
Eckhard Janeba, University of Mannheim
Time I: 
01:15pm to 02:45pm
Venue I: 
Eleanor Dulles Room (5.2.010), DIW Berlin, Mohrenstr. 58, 10117 Berlin

Abstract: This talk on May 4, 2012 gives an overview about the use of original surveys conducted among German politicians for the study of fiscal policy. The first study (Heinemann and Janeba, German Economic Review, 2011) uses a survey of members of the German Bundestag to understand the politicians’ subjective beliefs about the role of taxes for business  location decisions. It is shown that ideology is a major determinant which appears to be in conflict with traditional economic theory, as the question relates to non-ideological issues. In the second study (Janeba and Osterloh, ZEW Discussion Paper, 2012) a survey of mayors in Baden-Württemberg is used to determine empirically the spatial pattern of competition among jurisdictions for business investment through the use of the local business tax rate (Gewerbesteuer). The empirical pattern is then used to develop a new theoretical model of tax competition which in important aspects is consistent with empirical evidence on tax trends in Baden-Württemberg. Finally, the talk provides first descriptive results of a survey of members of all state parliaments in Germany to assess the likelihood and consequences of (not) implementing a debt break rule (Schuldenbremse) at the state level.

Deutsches Institut für Wirtschaftsforschung