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The fiscal and budgetary impact of COVID-19 pandemic on the public finances of the Basque Country: the Basque system of fiscal federalism put to the test

Author

Listed:
  • Mikel Erkoreka

    (Ituna Center for Basque Economic Agreement and Fiscal Federalism Studies (UPV/EHU))

Abstract

This article analyzes the fiscal and budgetary impact of the COVID-19 pandemic on the public finances of the Basque Country during 2020 and evaluates the performance and sufficiency of the system of fiscal federalism regulated by the Basque Economic Agreement. The research, which has a quantitative and qualitative character, employs the tools of fiscal and budgetary analysis - focusing on deficit and public debt management. The article concludes that the system of the Economic Agreement has withstood the demanding stress test provoked by the pandemic, maintaining unaltered the core principles that govern the Basque model of fiscal federalism: bilateralness in tax and financial relations between the Basque Country and the Spanish state, regulatory power and autonomy of tax management, and the principles of fiscal responsibility and unilateral risk.

Suggested Citation

  • Mikel Erkoreka, 2021. "The fiscal and budgetary impact of COVID-19 pandemic on the public finances of the Basque Country: the Basque system of fiscal federalism put to the test," EKONOMIAZ. Revista vasca de Economía, Gobierno Vasco / Eusko Jaurlaritza / Basque Government, vol. 100(02), pages 120-149.
    • Handle: RePEc:ekz:ekonoz:2021208
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    References listed on IDEAS

    as
    1. José Ignacio Conde-Ruiz & Manuel Díaz & Carmen Marín & Juan Rubio-Ramírez, 2020. "Observatorio Fiscal y Financiero de lasCC.AA. Previsiones de cierre 2020," Studies on the Spanish Economy eee2020-35, FEDEA.
    2. Angel de la Fuente, 2021. "Las finanzas autonómicas en 2020 y entre 2003 y 2020," Studies on the Spanish Economy eee2021-13, FEDEA.
    3. Katharina Herold, 2018. "Insolvency Frameworks for Sub-national Governments," OECD Working Papers on Fiscal Federalism 23, OECD Publishing.
    4. Kevin Morgan & Mikel Navarro & Jesús M. Valdaliso, 2020. "Economic governance in the Basque Country: balancing continuity and novelty," EKONOMIAZ. Revista vasca de Economía, Gobierno Vasco / Eusko Jaurlaritza / Basque Government, vol. 35(02), pages 171-210.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Mikel Erkoreka & Josu Hernando‐Pérez, 2023. "Decentralization: A handicap in fighting the COVID‐19 pandemic? The response of the regional governments in Spain," Public Administration & Development, Blackwell Publishing, vol. 43(2), pages 129-140, May.

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    More about this item

    Keywords

    Basque Country; COVID-19; basque economic agreement; fiscal federalism; public debt;
    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
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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