Institutions of Intergovernmental Fiscal Relations

Challenges Ahead

image of Institutions of Intergovernmental Fiscal Relations

Intergovernmental fiscal institutions are the overarching framework for relations across government levels. They comprise the constitutional set up of a country; the division of power between government levels; the prevalence of fiscal rules across government levels; intergovernmental budget frameworks; the role of independent bodies such as fiscal councils in shaping fiscal relations; the inter-ministerial organisation of fiscal decision making; and other framework conditions shaping intergovernmental fiscal relations and fiscal policy. This book brings together academics and practitioners dealing with or being involved in shaping the institutions of intergovernmental fiscal relations. It has an interdisciplinary focus and provides insight from various academic or practitioners’ fields: economists, political scientists, budget management specialists and others.



Fiscal constitutions: The fundamental drivers of intergovernmental fiscal policy

Fiscal constitutions contain a set of rules and frameworks, which are usually enshrined in a country’s fundamental laws. Fiscal constitutions guide fiscal policy and hence shape fiscal outcomes. This chapter describes the empirical approach to assessing the fiscal constitutions of 15 federal countries in a comparative way and provides an overview on the most salient results. The chapter first goes more into the details of what is understood by the term “fiscal constitutions”. The following section then describes the building blocks of fiscal constitutions and assesses them empirically using a common coding framework. Section 4 goes on to combine and link the building blocks to characterise specific types of fiscal constitutions, i.e. to what extent they are decentralised or integrated. Section 5 then traces the development of the fiscal constitutions over time, identifies main trends, and explains the major reforms and their driving forces. Lastly, Section 6 provides basic evidence on the association between types of fiscal constitutions and fiscal outcomes.


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