Tax Competition in Germany Before and After the Reunification

Bachelorarbeit aus dem Jahr 2011 im Fachbereich VWL - Fallstudien, Länderstudien, Note: 1,3, Universität Mannheim (Lehrstuhl für Volkswirtschaftslehre, Finanzwissenschaft und Wirtschaftspolitik), Sprache: Deutsch, Abstract: This Bachelor thesis contains an empirical analysis of tax competition among German municipalities in Lower Saxony (Niedersachsen) and Bavaria (Bayern). The distinguishing feature of this paper is that it exploits the German reunification of 1989 as an exogenous shock to communities located close to the prior border. The panel dataset contains detailed information on state and community specific variables from 1982 to 2006. Moreover, it utilizes an instrumental variable estimation to identify the intensity of competition among municipalities conditional on their distance to the border.