Fiscal Challenges in Multilayered Unions: An Overview and Case Study
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.
Joshua Aizenman is grateful for the support provided by the Dockson Chair in Economics and International Relations, USC. Gunnar Gunnarsson is grateful for assistance form A. Danielsson, H. Gardarsson and Th. G. Petursson. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research and Central Bank of Iceland.
Joshua Aizenman & Gunnar Gunnarsson, 2015. "Fiscal Challenges in Multilayered Unions: An Overview and Case Study," Social Sciences, MDPI, Open Access Journal, vol. 4(2), pages 373-392, May. citation courtesy of