Fiscal Federalism: a Solution for the European Union during the Crisis?

Author:Adina Trandafir, Luminita Ristea
Spiru Haret University, F
Spiru Haret University, F
: Addressing the cumb
fiscal federalist its architecture. F
redistribution of p olitical respon
capacity of a system compared
organizational structure, as the
comparison helps to establish pr
federalist is not the most importa
Keywords: redi
stribution of poli
1. Introduction
Theory of fiscal federalism, is
Exhaustively examining this issu
"The traditional theory of fiscal f
functions at different levels of
functions" (Richard Musgrave,
government at federal and regio
federal tax system provides usua
ones), stabilization (anti-
by a common shock) and the risk
are specific to the region hit by
example, von Hagen and Eiche
Bloechliger et al, 2010), even th
The euro area is facing a crisis qu
These are the three models of legitim
solving entity, the model community o
political rights.
Performance and Risks in the
scal Federalism: a
Solution for the
uropean Union
during the Crisis?
Adina Trandafir
, Luminiţa Ristea
y, Faculty of Financial and Accounting Managemen
y, Faculty of Financial and Accounting Managemen
bersome state
level fiscal crisis in the EU can be made and
e. Fiscal federalism is, in ter alia one of the principles of Eu rop
ies between independent countries. This article su r
ed to that of the EU fiscal capacity of a system from a sta
he U.S., addressing eight areas in crisis prevention
and com
priorities for the European fiscal system, leading to the concl
rtant measure to be adopted to combat state
level fiscal crisis i
olitical responsibility
; tax policy; fiscal crisis
is how best allocation of tasks at different lev
issue would reach areas such as politics, sociol
al federalism establishes a general legal framework
of government and appropriate fiscal instrumen
1959, Oates, 1972 cited in Oates, 1999: 1121). The
gional levels and through direct fiscal transfers b
sually redistribution (permanent transfers from rich
al policies adopted federal government tax when all
sharing transfers (temporary when only one regi
a shock). In practice, various forms of fiscal
chengreen, 1996, Ahmad and Brosio, 2006; Gich
though the United States has always been primary
quite pronounced, although the overall fiscal situa
timacy of the Europ ean fiscal p olicy presented i n the literatu
of shared values as sources of legitimacy and the EU as a
the European Economy
ent, Constanţa,
ent, Constanţa,
and on the lack of a
ropean fiscal policy,
survey the p otential
state with a federal
combating tax. This
nclusion that a more
is in the EU.
levels of government.
ogy, national identity
rk for the allocation of
ents to achieve these
The fiscal operations of
s between regions, the
icher r
egions to poorer
all regions are affected
egion and some regions
cal federation (see, for
ichiru et al, 2009; or
ary point of reference
uation and prospects in
ature: the EU as a problem
s an entity model based on

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