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International Finance Discussion Papers
The International Finance Discussion Papers logo links to the International Finance Discussion Papers home page Fiscal Federalism and European Integration: Implications for Fiscal and Monetary Policies
Edward M. Gramlich; Paul R. Wood
2000-694  (December 2000)

Abstract:  This paper examines European economic integration in light of standard thinking about fiscal federalism. We first describe the main features of European integration, analyzing how institutions in the European Union fit the prescriptions of a federal system. We find that in some areas the European Union has already developed arrangements that fit standard views of fiscal federalism, in other areas there is gradual movement toward prescribed arrangements, and in still other areas the European Unionís unique historical path may suggest some interesting new departures in the federalism literature. We try to extract some lessons from this analysis: some recommendations for Europe based on the orthodox principles of fiscal federalism, and some modifications of these orthodox principles based on the European experience.

Full paper (62 KB PDF)

European Union, tax harmonization

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