The present paper analyzes expectations of German politicians about the German debt brake (Schuldenbremse), which became part of the German constitution in 2009. This fiscal rule requires the federal government and the German states to run a (cyclically adjusted) budget deficit of no more than...

Using VAR analysis on US data, we show that unanticipated fiscal expansions boost private consumption and business formation. Models with an extensive investment margin, i.e. endogenous firm and product entry, have difficulties explaining these two phenomena simultaneously. Considering different...

To what extent should local and regional governments in the European Union be allowed to determine their own fiscal policies? This book explores the core issues of fiscal federalism in the European context. It combines theoretical and empirical analysis in addressing such questions as: what sort...