Evaluating the Effects of the Proposed Fiscal Equalization Scheme of the German State Prime Ministers

Tasks

In 2015, the prime ministers of the sixteen German states proposed anew fiscal equalization scheme because the current scheme is expiring in 2019. The project evaluated the expected effects of an implementation of the proposed equalization scheme in comparison to the existing scheme. We carried out projections of the fiscal consequences from 2020 to 2030 for the states as well as for the federal budget. Implementing the proposed equalization scheme would lower the financial equalization between states, and would lead to an increasing responsibility of the federal government.