IDEAS home Printed from
   My bibliography  Save this article

Fiscal federalism reforms in the European Union and the Greek crisis


  • Mark Hallerberg

    (Hertie School of Governance, Germany,


Based upon existing fiscal federal arrangements, this article considers the options facing the European Union to reform its own framework. There are two plausible ways the EU can stabilize the finances of its member states over the longer term. The first is to take steps that complement the market discipline of individual member states. For market discipline to play this positive role, three conditions need to be met: (1) markets need to have accurate information on member state finances; (2) the market valuation of a given state also has to be an accurate valuation of the sustainability of that state’s finances; and (3) populations need to interpret market discipline as a signal about their government’s competence and punish governments that face market pressure. Such a system is possible under the current Stability and Growth Pact, and indeed it appears that all three conditions held in summer 2009. Any bailout of a member state, however, undermines this type of system. More political integration would be needed to prevent a state from getting into a situation where a bailout would be an option. The Brazilian model is a precedent that the European Union could emulate.

Suggested Citation

  • Mark Hallerberg, 2011. "Fiscal federalism reforms in the European Union and the Greek crisis," European Union Politics, , vol. 12(1), pages 127-142, March.
  • Handle: RePEc:sae:eeupol:v:12:y:2011:i:1:p:127-142

    Download full text from publisher

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Torój, Andrzej & Bednarek, Elżbieta & Bęza-Bojanowska, Joanna & Osińska, Joanna & Waćko, Katarzyna & Witkowski, Dariusz, 2012. "EMU: the (post-)crisis perspective. Literature survey and implications for the euro-candidates," MF Working Papers 12, Ministry of Finance in Poland, revised 06 Mar 2012.
    2. Podsiadło Piotr, 2015. "State Aid for the Coal Sector in the European Union: Pre- and post-crisis perspective / Državna pomoč za premogovni sektor v Evropski uniji – pred- in pokrizna perspektiva," Naše gospodarstvo/Our economy, Sciendo, vol. 61(5), pages 3-11, October.
    3. Joshua Aizenman & Gunnar Gunnarsson, 2015. "Fiscal Challenges in Multilayered Unions: An Overview and Case Study," Social Sciences, MDPI, Open Access Journal, vol. 4(2), pages 1-20, May.
    4. C. Randall HENNING & Martin KESSLER, 2012. "Fiscal Federalism: US History for Architects of Europe’s Fiscal Union," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 6, pages 1-31.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:eeupol:v:12:y:2011:i:1:p:127-142. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (SAGE Publications). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.