Central Fiscal Authority Research Articles

Is a fiscal union optimal for a monetary union?

When is a fiscal union appropriate for a monetary union? In a monetary union without fiscal externalities, when local fiscal authorities have an informational advantage over a central fiscal authority in terms of their knowledge of countries’ preferences for government spending, a decentralized fiscal regime dominates a centralized one. Our novel result is that in the presence of fiscal externalities across countries, however, a decentralized fiscal regime is optimal for small monetary unions, whereas a centralized fiscal regime is optimal for large ones. These results shed new light on the debate on fiscal integration within the EU and its enlargement.

FISCAL POLICY IN KOSOVO AND ITS IMPACT ON ECONOMIC DEVELOPMENT

Fiscal policy in Kosovo (1999) is based on government revenue and expenditure for achieving certain economic and social goals, and to influence macroeconomic indicators.Fiscal policy in this direction should be in the function of development and economic growth, with a high employment rate and protected from inflation.After the war in Kosovo, an UNMIK mission was set up, which from June to September 1999 was designated to provide donations in order to meet the emergency needs for financing and activating public administration, infrastructure rehabilitation and public services.In September 1999, the United Nations Civilian Administration established the Central Fiscal Authority (CFA) in Kosovo to build fiscal policy.Fiscal policy under specific conditions in Kosovo was tightened to mobilize financial means to cover public needs. So initially it was determined to collect funds for the Treasury bypassing the aspect of development of Kosovo. No mitigating administrative measures have been taken for economic development.

Fiscal federalism and monetary unions: A quantitative assessment

In this paper, I provide a quantitative analysis of three different forms of fiscal federalism in monetary unions: fully decentralized regional fiscal authorities as the benchmark, fiscal equalization with nominal tax revenue sharing, and a common central fiscal authority. I assess the capability of the different arrangements to stabilize regional consumption, output, and employment over the business cycle. I also study the implications for interregional income, consumption risk sharing and welfare. From this analysis, the following results emerge. First, a central fiscal authority stabilizes consumption fluctuations and increases the scope of interregional income and consumption risk sharing. Second, fiscal equalization destabilizes consumption fluctuations and also reduces the scope of interregional income and consumption risk smoothing. Third, a central fiscal authority leads to welfare gains, whereas fiscal equalization leads to welfare losses.

The Stability and Growth Pact, and Balanced Budget Fiscal Stimulus: Evidence from Germany and Italy

This paper assesses the limitations that the Stability and Growth Pact has imposed on Italy’s economic recovery and its debt reduction. By evaluating Germany’s fiscal policy since 1997, the paper offers recommendations for the Italian authorities. Measures put forward by European Union institutions are hampering Italy’s economic recovery, and evidence indicates that fiscal consolidation is ineffective in reducing the debt-to-GDP ratio. A balanced budget fiscal injection seems the only way for Italy to escape from its economic slump without further violations of the SGP. The paper concludes that the Pact either needs to be reformed or replaced by a central fiscal authority.

'. . . treat them like Jewish objects' The treatment of the Sinti and Roma at the hands of the fiscal administration

The present contribution examines the role played by the German fiscal administration in the legalised plundering of the Sinti and Roma during the NS era with a view to establishing to what extent the treatment of the Sinti and Roma corresponded to that of the Jews. To this end, the structures and procedures in dealing with the Sinti and Roma are examined largely on the basis of two case-studies taken from the jurisdiction area of the President of the Central Fiscal Authority in Hannover. It is concluded that the legal basis and the structures in dealing with the Sinti and Roma and Jews were identical, but that in the case of the Sinti the procedure, though essentially the same, was applied by the fiscal bureaucracy in an even more peremptory and arbitrary manner, thus reducing the legalistic cloaking of the robbery to a mere formality, devoid of meaning. This is seen as a result of the traditional anti-Gypsy feeling in bourgeois society and of the Gypsy policy and Gypsy legislation in Germany which tradi...

A Repeated Interactions Model of Tax Competition

Models of tax competition usually assume a single‐period framework. This paper sets up a repeated interactions model of tax competition and establishes conditions under which fiscal policy harmonization can result from repeated interactions between governments. It is shown that fiscal policy harmonization cannot prevail when regional asymmetries are too strong. In such a case, the only way to achieve fiscal policy harmonization is to set up a central fiscal authority.

Will Fiscal Policy Be Effective Under EMU?

European Economic and Monetary Union does not envisage creating a central fiscal authority. Monetary and exchange rate policies will be centralized, but fiscal policy will remain a national responsibility, in line with the subsidiarity principle. This paper argues that monetary union will generate pressures for closer economic integration than currently envisaged. Although not a necessity, a more active central role could then be justified on the grounds of allocative efficiency, redistribution, and stabilization. While in the short term enhanced policy coordination may address those pressures satisfactorily, as economic integration proceeds, the case for a central fiscal authority may become stronger.