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Fiscal Federalism in the European Union: How Far Are We?

Author

Listed:
  • Rui Henrique Alves

    (CEMPRE and Faculdade de Economia da Universidade do Porto, Portugal)

  • Óscar Afonso

    (CEMPRE and Faculdade de Economia da Universidade do Porto, Portugal)

Abstract

In this paper, we compare the present process of definition and implementation of fiscal policies in the European Union with the main conclusions of the “fiscal federalism” theory. This is done in order to draw possible lessons for future evolution, particularly taking into account the possibility of creating a European “Federation of Nation-States”, which we supported in a previous work. We argue that these main conclusions are easily compatible with the emergence of a largely decentralised “Federation”, but are still far distant from the present situation. In this context, we argue for several important lines of change in the short-run, namely an effective change in the process of coordinating fiscal policies and a credible reform of the Stability and Growth Pact, and in the medium-long-run, namely an important increase in the size of the European budget.

Suggested Citation

  • Rui Henrique Alves & Óscar Afonso, 2007. "Fiscal Federalism in the European Union: How Far Are We?," FEP Working Papers 244, Universidade do Porto, Faculdade de Economia do Porto.
    • Handle: RePEc:por:fepwps:244
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    Cited by:

    1. Chortareas, Georgios & Mavrodimitrakis, Christos, 2017. "Strategic fiscal policies and leadership in a monetary union," European Journal of Political Economy, Elsevier, vol. 47(C), pages 133-147.
    2. Francisco A. Blanco & Francisco J. Delgado & Maria J. Presno, 2018. "Fiscal decentralization in the EU: Common patterns through a club convergence analysis," Working Papers. Collection A: Public economics, governance and decentralization 1812, Universidade de Vigo, GEN - Governance and Economics research Network.

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    More about this item

    Keywords

    Fiscal federalism; fiscal policy; European budget; fiscal discipline;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems

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