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Multi-level Finance and the Euro Crisis

Causes and Effects Edited by Ehtisham Ahmad, London School of Economics, UK, Chinese Academy of Fiscal Science and Zhejiang University, China, Massimo Bordignon, Department of Economics and Finance, Catholic University of the Sacred Heart, Milan and Giorgio Brosio, Department of Economics and Statistics, University of Turin, Italy
Representing a unique contribution to the analysis and discussion of the unfolding Eurozone crisis in terms of the relationship between central and local government, this book addresses a number of important fiscal and political economy questions. To what extent have local and regional governments contributed to the crisis? To what degree have subnational services and investments borne the brunt of the adjustments? How have multi-level fissures affected tensions between different levels of government from the supranational to the local? This volume covers these and many other critical issues that have been largely ignored despite their relevance.
Extent: 384 pp
Hardback Price: $154.00 Web: $138.60
Publication Date: 2016
ISBN: 978 1 78471 510 6
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Representing a unique contribution to the analysis and discussion of the unfolding Eurozone crisis in terms of the relationship between central and local government, this book addresses a number of important fiscal and political economy questions. To what extent have local and regional governments contributed to the crisis? To what degree have sub-national services and investments borne the brunt of the adjustments? How have multi-level fissures affected tensions between different levels of government from the supranational to the local? This volume covers these and many other critical issues that have been largely ignored despite their relevance.

The book first addresses general issues of fiscal coordination and management across levels of government in the context of incentives, which can be altered by the existence of a supranational tier. The country-specific chapters, prepared by leading experts, provide a thorough review of the key problems of multi-levels of government in the biggest economies in the Eurozone (France and Germany) and Southern Europe (Portugal, Spain, Italy and Greece). In further chapters the juxtaposition of Barcelona and Turin provides an opportunity to evaluate large investments in a multi-level context, associated, in this case, with the Olympics. Macedonia provides a discussion of the related issues in an EU accession country. As a whole, the book explores the long-term impact of the crisis on local service delivery and investment, and the consequences for sustainable growth and political cohesion. It also offers rarely found insights and suggestions to increase the stability and strength of multi-level European institutions.

This is an enlightening resource for all those, from academics and graduates to policy makers and practitioners, seeking a comprehensive understanding of European fiscal, federal and financial issues.
‘Are fiscally decentralized countries inherently more unstable? Or is it a question of the design of decentralization, requiring, for example, higher sub-national revenue autonomy and hard budget constraints? The ongoing euro crisis offers an assortment of relevant country case studies to test some of those important propositions. This volume provides authoritative and insightful assessments of how decentralization and macroeconomic stability relate to each other, and significantly contributes to our understanding of multi-level finance and to improving decentralization design.’
– Jorge Martinez-Vazquez, Georgia State University, US

Contributors: E. Ahmad, M.F. Ambrosanio, P. Balduzzi, M. Bordignon, G. Brosio, G. Chortareas, M. Fortuna, P. Garello, S. Lagos-Peñas, V.E. Logothetis, G. Milbradt, L.F. Minervini, A. Mourmouras, M. Nikolov, J.S. Pandiello, S. Piperno, P. Rangazas, A. Solé Ollé, P.B. Spahn, T. Ter-Minassian, A. Vinella





Contents:

Introduction: How Multilevel Finance has Contributed to the Crisis and is Affected by it?
Ehtisham Ahmad, Massimo Bordignon and Giorgio Brosio

PART I MANAGING SUBNATIONAL LIABILITIES IN EUROPE
1. Promoting Stabilizing and Sustainable Sub-national Fiscal Policies in the Euro Area
Teresa Ter-Minassian

2. Political Economy of Information Generation and Financial Management for Sub-national Governments: Some lessons from International Experience
Ehtisham Ahmad

3. History of the Constitutional Debt Limits in Germany and the New “Debt Brake” - Experiences and Critique:
Georg Milbradt

PART II INCIPIENT PROBLEMS IN THE BIGGEST COUNTRIES IN EUROPE
4. Multi-level Finance and the Euro Crisis: The German Experience
Paul Bernd Spahn

5. French Subnational Public Finances: On the Difficulty of being a Decentralized Unitary State.
Pierre Garello

PART III THE TROUBLED COUNTRIES OF SOUTHERN EUROPE
6. Economics and Politics of Local Greek Government
Giorgios Chortareas and Vassileios E. Logothetis

7. Portugal’s Multi-level Finance Adjustments Within the Sovereign Debt and Euro Crises
Mário Fortuna

8. Multi-level Finance and Governance in Spain: The Impact of the Euro Crisis
Santiago Lago-Peñas and Alberto Solé Ollé

9. Economic Crisis and Fiscal Federalism in Italy
Maria Flavia Ambrosanio, Paolo Balduzzi and Massimo Bordignon

PART IV CITIES, THE OLYMPICS AND GROWTH
10. A Tale of Two Cities: The Olympics in Barcelona and Turin
Giorgio Brosio, Stefano Piperno and Javier Suarez Pandiello

PART V ACCESSION STATES
11. The Impact of the Global Crisis on Macedonian Local Governments.
Marjan Nikolov

PART VI SOME GENERAL LESSONS
12. Clientelistic Politics and Multi-level Finance: Some Implications for Regional Inequality and Growth
Alex Mourmouras and Peter Rangazas

13. Incentives Facing Local Governments in the Absence of Credible Enforcement
Leo Fulvio Minervini and Annalisa Vinella

Index