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Fiscal Sustainability Across Government Tiers

Author

Listed:
  • Peter Claeys

    (Grup d'Anàlisis Quantitativa Regional(AQR) i Institut de Recerca en Economia Aplicada (IREA), Departament d'Econometria, Estadística i Economia Espanyola. Facultat de Ciències Econòmiques i Empresarials de la Universitat de Barcelona.)

  • Raúl Ramos

    (Grup d'Anàlisis Quantitativa Regional(AQR) i Institut de Recerca en Economia Aplicada (IREA), Departament d'Econometria, Estadística i Economia Espanyola. Facultat de Ciències Econòmiques i Empresarials de la Universitat de Barcelona.)

  • Jordi Suriñach

    (Grup d'Anàlisis Quantitativa Regional(AQR) i Institut de Recerca en Economia Aplicada (IREA), Departament d'Econometria, Estadística i Economia Espanyola. Facultat de Ciències Econòmiques i Empresarials de la Universitat de Barcelona.)

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.

Suggested Citation

  • Peter Claeys & Raúl Ramos & Jordi Suriñach, 2007. "Fiscal Sustainability Across Government Tiers," Working Papers XREAP2007-14, Xarxa de Referència en Economia Aplicada (XREAP), revised 2007.
    • Handle: RePEc:xrp:wpaper:xreap2007-14
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    File URL: http://www.xreap.cat/RePEc/xrp/pdf/XREAP2007-14.pdf
    File Function: Revised version, 2007
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    Keywords

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    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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