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Please use this identifier to cite or link to this item: https://hdl.handle.net/2445/119349
Sub-national deficits in European countries: The impact of fiscal rules and tax autonomy
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This paper empirically examines how fiscal rules and tax autonomy influence deficits of sub-national sectors across European countries. I use a new panel-data set to measure tax autonomy and the stringency of fiscal rules for EU15 regional and local government sectors over the period 1995 to 2008. I apply an instrumental variables approach to obtain an unbiased estimate of the impact of fiscal rules on deficits. I use political variables describing the central governments characteristics as instruments for fiscal rules at the sub-national level. The results show that the effectiveness of fiscal rules and tax autonomy depends on the constitutional structure. Fiscal rules decrease deficits only in unitary countries. Deficits of sub-national sectors in federations can be avoided through tax autonomy.
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FOREMNY, Dirk. Sub-national deficits in European countries: The impact of fiscal rules and tax autonomy. European Journal of Political Economy. 2014. Vol. 34, num. June, pags. 86-110. ISSN 0176-2680. [consulted: 13 of August of 2026]. Available at: https://hdl.handle.net/2445/119349