Narrowing Vertical Fiscal Imbalances in Four European Countries
22 Pages Posted: 3 May 2012
Date Written: March 2012
This paper describes the institutional changes that have induced a decline in the vertical fiscal imbalance (VFI) - defined as the share of sub-national own spending not financed through own revenues - in four European countries: Belgium, Italy, Norway, and Spain. The decline in VFI was achieved through progressive devolution of revenues to sub-national governments in Belgium, Italy, and Spain, while re-centralization of health sector expenditures was the cause of the decline in the VFI in Norway.
Keywords: Cross country analysis, Current account balances, Europe, European Economic and Monetary Union, Fiscal policy, Government expenditures, Intergovernmental fiscal relations
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