Policy Coordination in Fiscal Federalism; Drawing Lessons From the Dubai Debt Crisis
Serhan Cevik ()
No 11/147, IMF Working Papers from International Monetary Fund
Using the cyclically adjusted non-hydrocarbon primary balance, this paper investigates the evolution of the fiscal policy stance in the United Arab Emirates at consolidated and sub-national levels in the run-up and after the crisis. The empirical findings show that procyclical fiscal policies prior to the crisis reinforced the financial sector cycle, exacerbated the economic upswing, and thereby contributed to the build-up of macro-financial vulnerabilities. The paper also sets out policy lessons to develop a rule-based fiscal framework that would help strengthen fiscal policy coordination between the various layers of government and ensure long-term fiscal sustainability and a more equitable intergenerational distribution of wealth.
Keywords: Business cycles; Debt sustainability; Contingent liabilities; Fiscal imbalances; Public debt; Fiscal sustainability; Fiscal policy; Hydrocarbons; Natural resources; United Arab Emirates; Taxation; cyclically-adjusted budget balance, fiscal federalism, statement of fiscal risks, debt, deficit, budget, public sector, General Outlook and Conditions, Fiscal Policies and Behavior of Economic Agents: General, National Government Expenditures and Related Policies: General, National Budget, and Debt: General, National Budget, and Debt: Other, Governmental Loans, Loan Guarantees, Credits, and Grants, And Finance, (search for similar items in EconPapers)
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