Foremny, Dirk2018-01-262018-01-262014-060176-2680https://hdl.handle.net/2445/119349This 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.25 p.application/pdfeng(c) Elsevier, 2014Política fiscalDèficit públicDeute tributariPaïsos de la Unió EuropeaFiscal policyBudget deficitsTax debtEuropean Union countriesinfo:eu-repo/semantics/article6494502018-01-26info:eu-repo/semantics/openAccess