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Policy Coordination in Fiscal Federalism; Drawing Lessons From the Dubai Debt Crisis

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  • Serhan Cevik

Abstract

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.

Suggested Citation

  • Serhan Cevik, 2011. "Policy Coordination in Fiscal Federalism; Drawing Lessons From the Dubai Debt Crisis," IMF Working Papers 11/147, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:11/147
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    Citations

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    Cited by:

    1. Raimundo Soto & Ilham Haouas, 2012. "Has the UAE Escaped the Oil Curse?," Working Papers 728, Economic Research Forum, revised 2012.
    2. Carlos Caceres & Serhan Cevik & Ricardo Fenochietto & Borja Gracia, 2015. "The Day After Tomorrow: Designing an Optimal Fiscal Strategy for Libya," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 2(4), pages 32-50, July.
    3. Syed Basher, 2015. "Regional initiative in the Gulf Arab States: the search for a common currency," International Journal of Islamic and Middle Eastern Finance and Management, Emerald Group Publishing, vol. 8(2), pages 185-202, June.

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