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

Suggested Citation

Karpowicz, Izabela, Narrowing Vertical Fiscal Imbalances in Four European Countries (March 2012). IMF Working Paper No. 12/91, Available at SSRN:

Izabela Karpowicz (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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