Fiscal sustainability across government tiers: an assessment of soft budget constraints

Peter Claeys, Raul Ramos and Jordi Suriñach

No 200714, IREA Working Papers from University of Barcelona, Research Institute of Applied Economics

Abstract: This paper analyses how fiscal adjustment comes about when both central and sub-national governments are involved in consolidation. We test sustainability of public debt with a fiscal rule for both the federal and regional government. Results for the German Länder show that lower tier governments bear a relatively smaller part of the burden of adjustment, if they consolidate at all. Most of the fiscal adjustment occurs via central government debt. In contrast, both the US federal and state levels contribute to consolidation of public finances.

Keywords: fiscal policy; fiscal rules; EMU; SGP; fiscal federalism (search for similar items in EconPapers)
JEL-codes: E61 E62 H11 H72 H77 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2007-07, Revised 2007-07
New Economics Papers: this item is included in nep-cba, nep-mac and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.ub.edu/irea/working_papers/2007/200714.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ira:wpaper:200714

Access Statistics for this paper

More papers in IREA Working Papers from University of Barcelona, Research Institute of Applied Economics Contact information at EDIRC.
Bibliographic data for series maintained by Alicia García ().