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Financial Federalism in Germany: Cooperation or Competition?


  • Feld Lars P.

    (Philipps-Université de Marbourg)


In this article, German federalism is analyzed through its implications for public spending and for public revenue. The structure of government spending and taxation has evolved in the direction of greater centralisation. This tendency reveals itself (1) in the constitutional changes with regard to taxation, (2) the major territorial reforms and (3) in the increased influence of the federal state on the public spending of inferior levels of government. The evening out between authorities is too egalitarian and the effects on economic development are nefarious. In contrast to a unitary system with a powerful central government, this cooperative federation suffers from a drawback, namely, that the federal state can often not make decisions without the agreement of member states. The consequence is that some reforms are hindered. It is in this way that the need of a fiscal competition between member states in order to better economic policy in Germany makes it felt.Dans cet article, le fédéralisme allemand est analysé à travers ses implications pour les dépenses publiques et pour les recettes publiques. Lévolution des compétences en matière dimposition et de dépenses indique une tendance à la centralisation. Celle-ci apparaît (1) dans les changements constitutionnels relatifs aux impôts, (2) dans les grandes réformes territoriales, et (3) dans laugmentation de linfluence de lÉtat fédéral sur les dépenses publiques des autres niveaux gouvernementaux. La péréquation entre les collectivités est trop égalitaire et les effets sur le développement économique sont néfastes. Comparé à un système unitaire avec un puissant gouvernement central, ce fédéralisme coopératif a le désavantage dun État fédéral qui ne peut pas souvent prendre une décision sans laccord des états fédérés. Par conséquent, quelques réformes sont bloquées. Cest ainsi que se fait sentir un besoin de concurrence fiscale entre les fédérés afin daméliorer a politique économique en Allemagne.

Suggested Citation

  • Feld Lars P., 2003. "Financial Federalism in Germany: Cooperation or Competition?," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 13(4), pages 1-24, December.
  • Handle: RePEc:bpj:jeehcn:v:13:y:2003:i:4:n:3

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    References listed on IDEAS

    1. Frey, Bruno S. & Eichenberger, Reiner, 1996. "FOCJ: Competitive governments for Europe," International Review of Law and Economics, Elsevier, vol. 16(3), pages 315-327, September.
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