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Fiscal Sustainability Across Government Tiers

Peter Claeys (), Raul Ramos () and Jordi Suriñach ()

No XREAP2007-14, Working Papers from Xarxa de Referència en Economia Aplicada (XREAP)

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 debt consolidation, 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: 34 pages
Date: 2007, Revised 2007
New Economics Papers: this item is included in nep-cba, nep-mac, nep-pbe and nep-pol
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Downloads: (external link) First version, 2007 (application/pdf) Revised version, 2007 (application/pdf)

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