Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/214460 
Year of Publication: 
2010
Series/Report no.: 
CREMA Working Paper No. 2010-02
Publisher: 
Center for Research in Economics, Management and the Arts (CREMA), Basel
Abstract: 
After some theoretical considerations, fiscal institutions called "debt brakes" designed to prevent public deficit and debt from going off course, are discussed. We first present some models applied in some Swiss cantons, especially in the canton of St. Gallen, then the respective institution introduced in 2001 at the Swiss federal level, and finally the recently introduced German solution. While the models in the different cantons are quite successful, we still have to wait for the proof that the German model in particular is viable. We also discuss how the problem of a possible bail-out of states and local communities could be handled. We conclude that by choosing appropriate institutions federal countries are at least as able to perform a sustainable fiscal policy as unitary states.
Subjects: 
Sustainability of Public Finances
Public Debt
Debt Brake
JEL: 
H63
H74
Document Type: 
Working Paper

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