The Role of Fiscal Coordination and Partisanship in the Spanish Fiscal Federalist System: Lessons for European Union reforms

 

The Role of Fiscal Coordination and Partisanship in the Spanish Fiscal Federalist System: Lessons for European Union Reforms

An issue that the European Union continues to face is how to coordinate the economic and fiscal policies of its member states. Recent reforms that created the European Semester require additional information concerning member states’ fiscal plans for the Commission and Council to review more rigorously. Spain has developed similar provisions for its regions. In this paper, Mark Hallerberg and Diego Salazar-Morales consider the possible lessons arising from the emerging federation in Spain for the European framework. They analyse the performance of Spain’s fiscal federalist framework with a special emphasis on its coordination and political relationship with the autonomous regions. Their findings suggest that coordination agreements are negatively correlated with balances, indicating that such agreements are indicators of fiscal problems and also that they did not contribute to lower deficits. Moreover, they find that politics, rather than fiscal rules and frameworks, led to differing fiscal performance. The paper concludes with lessons from Spain’s experience for the European Union.

Download the working paper here

Mark Hallerberg is Dean of Research and Faculty and Professor of Public Management and Political Economy at the Hertie School of Governance and a member of the Dahrendorf Forum working group on the future of European governance. His research focuses on fiscal governance, tax competition, financial crises, and European Union politics.

Diego A. Salazar-Morales is Research Associate at the Dahrendorf Forum. He has previously held research positions in the State, Risk and Society and the Building Better Bad Banks projects at the Hertie School of Governance, where he is also a doctoral candidate.

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