With an outstandingly long data set of Swiss cantonal public finances we study whether the Swiss subnational level runs sustainable fiscal policies. Going back to the year 1905, we test for stationarity of cantonal public debt, revenue and spending and for cointegration between cantonal revenues...

A common political claim is that decentralized governments undermine policy makers' ability to fight fiscal imbalance. This paper examines how different fiscal institutions influence the likelihood of a successful fiscal adjustment. Using a panel of the Swiss cantons from 1981 to 2001, we first...