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Fiscal sustainability across government tiers

  • Peter Claeys
  • Raúl Ramos
  • Jordi Suriñach
Original Paper

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 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 

JEL codes

E61 E62 H11 H72 H77. 

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Copyright information

© Springer-Verlag 2008

Authors and Affiliations

  1. 1.Facultat de Ciències Econòmiques i Empresarials (UB), Grup d’Anàlisi Quantitativa Regional (AQR-IREA)Universitat de BarcelonaBarcelonaSpain
  2. 2.Facultat de Ciències Econòmiques i Empresarials, Grup d’Anàlisi Quantitativa Regional (AQR-IREA), Estadística i Economia Espanyola, Department of EconomicsUniversitat de BarcelonaBarcelonaSpain

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