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Fiscal Challenges in Multilayered Unions: An Overview and Case Study

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  • Joshua Aizenman

    (Department of Economics and International Relations, University of Southern California, VKC 330, Los Angeles, CA 90089, USA
    These authors contributed equally to this work.)

  • Gunnar Gunnarsson

    (Central Bank of Iceland, Kalkofnsvegur 1, Reykjavík 150, Iceland
    These authors contributed equally to this work.)

Abstract

This paper reviews recent research dealing with fiscal discipline and revisit the issues of fiscal control in federal systems, focusing on selective case studies covering the 2000s, before and after the global financial crisis (GFC). We start by contrasting the recent fiscal history of California to that of Greece, illustrating the different ways of dealing with fiscal deficiencies in a mature union, U.S., versus a young union, Eurozone. We continue with an overview of the fiscal developments in Brazil, illustrating the challenges facing federal systems in emerging markets, and possible ways to move forward in upgrading a country’s fiscal institutions. We conclude with the fiscal history of Iceland before and after the financial crisis—a standalone small country, assessed favorably by rating agencies prior to the GFC, and now recovering from a deep financial crisis.

Suggested Citation

  • Joshua Aizenman & Gunnar Gunnarsson, 2015. "Fiscal Challenges in Multilayered Unions: An Overview and Case Study," Social Sciences, MDPI, vol. 4(2), pages 1-20, May.
    • Handle: RePEc:gam:jscscx:v:4:y:2015:i:2:p:373-392:d:49770
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    Cited by:

    1. Cristina Arellano & Andrew Atkeson & Mark Wright, 2016. "External and Public Debt Crises," NBER Macroeconomics Annual, University of Chicago Press, vol. 30(1), pages 191-244.

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    More about this item

    Keywords

    fiscal union; fiscal discipline; debt crisis;
    All these keywords.

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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