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Economic crisis and federal dynamics

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1
ECONOMIC CRISIS AND FEDERAL DYNAMICS
DIETMAR BRAUN AND PHILIPP TREIN
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1 Introduction+
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A-#%$%-"' @%$8-&$' 1' A&#8' ;-0' ;&0$8+0' <+"$01.%[1$%-"' Ne&+"$+#2' J&0[+.2' 1"(' Jh09h$$+0'
=>>gRE''
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4+0G' B&<8' <-"#$01%"+(' :G' VW' A-@+0#2' @8%.+' UQ' %"' $8+' 3WO' <1"' 1<$' @%$8-&$' B1F-0'
<-"#$01%"$#' :G' VWE' W@%$[+0.1"(' 81#' -".G' 0+<+"$.G2' %"' =>>g2'0+4%#+(' (%#$0%:&$%-"' -;'
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1;;1%0#' Ne-H' =>>?RE' 78%#' <0+1$+#' 1' ;.&<$&1$%"9' +/&%.%:0%&B' (+A+"(%"9' -"' UQ' %"%$%1$%4+#'
1"(' VW' <-BA.%1"<+E' !"' W@%$[+0.1"(2' :G' <-"$01#$2' .%K+' %"' U1"1(12' $8+' UQ' B1G' "-$' :+'
#&;;%<%+"$.G'#$0-"9'$-'1<$'1.-"+'1"(' B%98$' (+A+"(' -"'VW'1<$%-"2'@8%<8'"++(#'4-.&"$10G'
<--A+01$%-"E'W8%;$%"9':1.1"<+#'10+'"-$'$-':+'+HA+<$+('%"'$8%#'<1#+E''
78+'$@-'.1#$'0+B1%"%"9';+(+01$%-"#2'Q+0B1"G'1"('O&#$01.%12'814+2'.%K+'$8+'3WO2'1'#$0-"9'
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B1$$+0#' %#' @+..' K"-@"E' !$#' B1%"' %"#$0&B+"$' %#2' .%K+' %"' $8+' 3WO2' $8+' &#+' -;' <-"(%$%-"1.'
901"$#E'J+';%"('$8+0+;-0+'1'#%B%.10'<-"#$+..1$%-"'-;'1';+(+01.'91B+'$81$'%#':1#+('-"';%#<1.'
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B1F-0'#8%;$#'%"'$8+':1.1"<+'-;'A-@+0#E''
78+#+'10+2' -;'<-&0#+2'-".G' <-"F+<$&0+#'1"(' %$'"++(#' $-' :+'#++"' %;'#&<8' +HA+<$1$%-"#' 10+'
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814+'(%;;+0+"$'+;;+<$#'-"'#$1:%.%$G'1"('%"#$1:%.%$G'-;';+(+01.'1001"9+B+"$#E''
5
3 Fiscal+policies+and+federal+relations+
78+' 0+<+"$' +<-"-B%<' 0+<+##%-"' <-";0-"$+(' B-#$' #$1$+#' @%$8' (+<0+1#%"9' +<-"-B%<'
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"++(+('$-'B1%"$1%"'#+04%<+#'1"('#-<%1.'@19+#'@8%.+'(+<%(%"9'&A-"'1((%$%-"1.'#A+"(%"9'
-0'901"$%"9' -;' $1H'<0+(%$#' %"' -0(+0'$-' 0+4%4+'+<-"-B%<'1<$%4%$%+#E' e-0';+(+01.'#$1$+#' $8%#'
<1&#+('A10$%<&.10'A0-:.+B#E'
!"';+(+01.'#$1$+#'9-4+0"B+"$#'1$'(%;;+0+"$'.+4+.#'(+<%(+'-"'#A+"(%"9'1"('T'%"'B-#$'<1#+#'
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"-$'$8+'A-@+0'$-'+";-0<+'#&<8'#A+"(%"9':G'VW2'%$'(+A+"(#'+%$8+0'-"'$8+'^9--('@%.._'-;'VW'
$-'<-BA.G'-0'B&#$'-;;+0'901"$#'VW'<1"'&#+';-0'#A+"(%"9E'!"'$8+'.1$$+0'<1#+2'1'A0-:.+B'-;'
^B-01.'81[10(_' 10%#+#S' VW'B1G' $1K+' $8+'B-"+G' :&$' (-'"-$' #A+"('-0'#A+"(' %$';-0'-$8+0'
A&0A-#+#'$81"'%"$+"(+(E']".G'%;'$8+'UQ'81#'#%9"%;%<1"$'+HA+"(%$&0+'1&$8-0%$G'1"('%;'%$'<1"'
#A+"('B-0+'B-"+G'%"'1'(%#<0+$%-"10G'@1G'(&0%"9'$8+'<0%#%#2'#&<8'<--0(%"1$%-"'A0-:.+B#'
<1"' :+' 14-%(+(E' V-0+-4+02' ;%#<1.' 0+(%#$0%:&$%-"' 1001"9+B+"$#' -;$+"' <-"#$01%"' <0%#%#'
B1"19+B+"$E'!"'$1HL#810%"9' #G#$+B#2'UQ'B1G'"++(' $-'$01"#;+0'B-#$' -;' %$#'0+#-&0<+#'$-'
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(&0%"9' $8+' <0%#%#E' O..' %"' 1..2' $8+' ^;%#<1.' 0+9%B+_T' $8+' -4+01..' (%#$0%:&$%-"' -;' 1&$8-0%$G' %"'
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+HA+"(%$&0+#E'
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$1H'<0+(%$#'$-'#$%B&.1$+'+<-"-BG'B1G':+'B1(+'%"+;;+<$%4+'(&+'$-'-AA-#%"9'$1H'A-.%<%+#'-;'
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j+"<+2' ;+(+01$%-"#' 10+' <-";0-"$+(' @%$8' <--0(%"1$%-"' A0-:.+B#' @8+"' %BA.+B+"$%"9'
M+G"+#%1"' (+B1"(' B1"19+B+"$' #$01$+9%+#E' 78+G' <1"' +"$1%.' (%;;%<&.$%+#' $-' #-.4+' $8+'
+<-"-B%<'<0%#%#E'7-' @81$'+H$+"$'#&<8' A0-:.+B#'-<<&0'(+A+"(#' -"'$8+'A10$%<&.10' ^;%#<1.'
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6
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814+'"-'.1#$%"9'+;;+<$#E''
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4 Crisis+reactions+
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4.1 Temporary,reduction,of,discretion,
O<<-0(%"9' $-' -&0' ;%"(%"9#' tax+ relief+ measures,+ @8%<8' @+0+' &#+(' %"' <-&"$0%+#' @%$8' $1HL
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8
81(' ^4-%<+_' %"' ;+(+01.' (+<%#%-"LB1K%"92' 1#' ;-0' +H1BA.+' %"' WA1%"' 1"(' Q+0B1"G2'
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@8+"' %"#%#$%"9' -"' #A+"(%"9' %"' 1.$+0"1$%4+' +"+09%+#E' e-0'VW' $8+' <-"#$01%"$#' (&+' $-'
#A+"(%"9'0&.+#'10+'<-BA+"#1$+(':G'$8+'%";.&H'-;'1((%$%-"1.'B-"+G'$8+G'&#&1..G'"++('$-'
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9
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J%$8' $8+#+' (+<%#%-"#2' $8+' UQ' 1%B+(' 1$' 901(&1..G' 0+(&<%"9' $8+' $1H' #810+#'-;'VWE' 78+'
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9+"+01.'1<<+A$1"<+'-;'$8+#+'901"$#':G'VW'@1#'@+1KE']".G'1:-&$'-"+'$8%0('-;'$8+'B-"+G'
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]".G' %"' $8+' ;+(+01$%-"#' ;-0B%"9' $8+' .1#$' 90-&A2' <-"(%$%-"1.' 901"$#' @+0+' <-"$+#$+(' $-'
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4.2 Acts,of,defiance,
78+'#+<-"('<81..+"9+';-0'$8+'#$1:%.%$G'-;'$8+';+(+01.':1.1"<+'-;'A-@+0'0+#&.$';0-B'1<$#'
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10
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'
4.3 Authority,migration,
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:1.1"<%"9' $8+' :&(9+$' A.1G+(' 1' A10$%<&.10.G' %BA-0$1"$' 0-.+E' O..' ;-&0' <-&"$0%+#' 10+'
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11
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12
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'
5 Fiscal+ policies+ in+ economic+ crisis+ and+ the+ stability+ of+ federal+ balance+ of+
power+
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13
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<-&"$0%+#'@%$8'1"'oscillating+equilibrium+of+powerE'
!"'India2'$8+'+<-"-B%<'<0%#%#'@1#'"-$'$8+'<1&#+'-;'#$01$+9%+#'-;'UQ'$-'0+L#8%;$'$8+';%#<1.'
:1.1"<+'%"'%$#';14-0E'O'"&B:+0'-;'<+"$01.%[%"9'B+1#&0+#'@+0+'$1K+"':+;-0+'$8+'<0%#%#2'
1B-"9'$8+B'1"'1&$8-0%$G'#8%;$'%"'A&:.%<':-00-@%"9E'Y&0%"9'$8+'<0%#%#'$8+'UQ'+B+09+('
1#'$8+'(-B%"1$%"9'19+"<G'$81$'<1"'1$'.%:+0$G'(+$+0B%"+'$8+'<1A1<%$G'-;'VW'$-'1<$'N:G'
14
+1#%"9'(+:$'.%B%$#'1"(':G'&#%"9'<-"(%$%-"1.'901"$#RE'78%#2'-;'<-&0#+2'<-"$0%:&$+#'1.#-'
$-'$8+' %B19+' -;' .+1(+0#8%A' -;'$8+' UQ' 1"(' B1G' %"';&$&0+' 8+.A'$-' 0+;-0B' $8+' ;+(+01.'
-0(+0E' Y+<+"$01.%[1$%-"' 1"(' <+"$01.%[1$%-"' 10+' #$%..' %"' 1"' &"#$1:.+' +/&%.%:0%&B'%"'
!"(%1E''
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$-'$0+#A1##'$8+'1&$8-0%$G'-;'VWE'W+0%-&#';%#<1.'%B:1.1"<+#'.+('$-'1&$8-0%$G'B%901$%-"'
%"'(+A$'A-.%<GE']"'$8+'-$8+0'81"(2'+;;-0$'$-'<-"$%"&+'@%$8'(+<+"$01.%[1$%-"'1%B+('1$'
$01"#;+00%"9'B-0+'$1H'0+#-&0<+#'$-'VWE'Y+<+"$01.%[1$%-"'1"('<+"$01.%[1$%-"'10+':-$8'
#$%..'4%0&.+"$';-0<+#'%"';%#<1.'0+.1$%-"#E'j-@+4+02'$8+'@+1K+"%"9'-;'0+9%-"1.'A10$%+#'%"'
$8+' ;+(+01.' A10.%1B+"$' <-&.(' 4+0G' @+..' #%9"%;G' $81$' $8+' B-4+#' $-' 9%4+' UQ' B-0+'
<1A1<%$%+#' $-' 1<$' <-&.(' 9-' B&<8' ;&0$8+0E' !"' WA1%"' $8+0+;-0+' -"+' <1"' +HA+<$' B-0+'
<+"$01.%[1$%-"'1"('1'@+1K+"%"9'-;'$8+'(+<+"$01.%[1$%-"'A0-<+##E''
!"' Argentina2' "-' 0+;-0B#' #&<<++(+(' :&$' $8+' UQ' (+B-"#$01$+(' %$#' (-B%"1"$' 0-.+' %"'
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<-"(%$%-"%"9'+H$01' $01"#;+0#'-;' $1H+#E'78%#' #8-&.('9%4+' 1'#GB:-.%<' :--#$'$-' UQ'$81$'
$8+'"+@'M%0<8"+0'9-4+0"B+"$'<-&.('&#+'$-'#$0+"9$8+"'%$#'A-#%$%-"'4%#LiL4%#'VWE'
!"'$8+'stable+federal+countries'@+'(-'"-$';%"('0+.+41"$'1$$+BA$#'$-'#8%;$'$8+'#$1$&#'/&-E'
Z&$'+4+"'8+0+'$8+'<0%#%#'.+;$'%$#'B10K#E''
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+H%#$%"9' ;+(+01.' #$0&<$&0+#E' 78+0+' @1#' 1' 9+"+01.' <--A+01$%4+' 1$$%$&(+' 1$' $8+'
;+(+01.'1"('$8+'<1"$-"1.'.+4+.E'78+'+<-"-B%<' <0%#%#' 0+B1%"+(' $--'@+1K'$-'0+1..G'
$+#$'$8+'0+#%.%+"<+'-;'$8+';%#<1.';+(+01.'-0(+0'%"'W@%$[+0.1"(E'78%#'B%98$'<81"9+'%"'
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Germany'81#' 0+B1%"+('&"<-"$+#$+(E' !$'@1#' $8+0+;-0+' r:&#%"+##'1#' &#&1.r'@8+"'
$8+' UQ' $--K' $8+' .+1(' $-' ;%98$' 191%"#$' $8+' +<-"-B%<' <0%#%#E' 78+' A-.%<%+#' B1%".G'
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-0(+0E'
Y+4+.-AB+"$#'814+' :++"'#%B%.10' %"'Australia2' @8+0+'$8+' UQ'<-";%0B+(' %$#';%#<1.'
(-B%"1"<+' :G' $1K%"9' $8+' .+1(' %"' <-B:1$%"9' $8+' +<-"-B%<' <0%#%#E' Y%#<&##%-"#'
%"(&<+(':G'$8+' <0%#%#' <-"<+0"'&"#-.4+('A0-:.+B#' -;'0+('$1A+' %"';%#<1.'0+.1$%-"#E'
W&<8' (%#<&##%-"#' ;.10+' &A' ;0-B' $%B+' $-' $%B+' 1"(' $8+' +<-"-B%<' <0%#%#' 914+'
109&B+"$#'$-' UQ'$-' /&+#$%-"' $8+'+;;%<%+"<G' -;'$8+' ;%#<1.'-0(+0' @%$8-&$' 8-@+4+0'
.1&"<8%"9' 1"G' <-"<0+$+' 0+;-0B' A0-A-#1.#' &"$%.' "-@E' W$1:%.%$G' @1#' $8+0+;-0+'
B1%"$1%"+(E''
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<0%#%#E'78+'+B+09%"9'<-BA.1%"$#'1:-&$'$8+'<-"(%$%-"1.'901"$#'@+0+'"-$8%"9'"+@E'
Z&$'(%#<&##%-"#'B1G'4+0G'@+..'#$10$'%"'$8+'"+10';&$&0+':+<1&#+'-;'$8+'0+.&<$1"<+'
15
-;' VW' $-' 1<<+A$' $8+#+' 901"$#' -0'$8+' <-"#$01%"$#' $-' :1.1"<+' $8+%0' :&(9+$E' VW'
$8+B#+.4+#'10+'-;$+"'1$'$8+':0%"K'-;';%"1"<%1.'(%#1#$+0'@%$8';.10%"9'(+:$'01$+#2':&$'
$8+G' <1""-$' 0+.G' -"':1%.' -&$' :G' $8+' UQ' -0'-"'1"' +;;%<%+"$' ;%"1"<%1.' +/&1.%[1$%-"'
#G#$+B' $81$' <-&.(' 8+.A' $-' #$1:%.%[+' $8+%0';%"1"<%1.' #%$&1$%-"E' 78+#+' #$0&<$&01.'
@+1K"+##+#' %"' $8+' +H%#$%"9' ;%#<1.' 0+9%B+2' @8%<8' 8%"(+0+('#-.&$%-"#' $-' :-$8' $8+'
+<-"-B%<'1"('$8+';%"1"<%1.'<0%#%#2'B1G';-0<+':-$8'#%(+#'$-'+"$+0'%"$-'"+9-$%1$%-"#'
1:-&$'1'<81"9+'%"'$8%#'0+9%B+E'+
6 Conclusion+
7-'#&B'&A2'@+';%"('B-0+'<-"$%"&%$G'$81"'<81"9+'(&0%"9'$8+'+<-"-B%<'<0%#%#'-;'=>>I'
1"(' =>>DE' WA+<$1<&.10' $&0"10-&"(#' L' ;0-B' (+<+"$01.%[+(' $-' <+"$01.%[+(' :1.1"<+#' -;'
A-@+0'T' -0' +4+"'1' <.+10' $0+"('$-@10(#'#$0+"9$8+"%"9' <+"$01.'1&$8-0%$G'814+' "-$'$1K+"'
A.1<+E' !"' A0%"<%A.+2' 1"' +<-"-B%<' <0%#%#' <1"' 814+' .-"9L.1#$%"9' <+"$01.%[%"9' +;;+<$#' -"'
;+(+01.' #$0&<$&0+#' 1#' $8+' Q0+1$' Y+A0+##%-"' (+B-"#$01$+(E' 78+' #$0&99.+' ;-0' ;%#<1.'
1&$8-0%$G'%#'<+0$1%".G'1'B1F-0':1$$.+;%+.('%"';+(+01$%-"#2'1#'(%#<0+$%-"'1:-&$'0+4+"&+#'1"('
+HA+"(%$&0+#' (+$+0B%"+#' $8+' <1A1<%$G' -;' 1..' $+00%$-0%1.' 1<$-0#' $-' 1<$E' 781$' @+' (%(' "-$'
-:#+04+'-A+"' #$0&99.+#' (&0%"9' $8+' A+0%-(' %"4+#$%91$+(' 8+0+' <1"' :+' +HA.1%"+(' :G'$8+'
0+.1$%4+.G' .%B%$+(' +;;+<$#' $8+' <0%#%#' 81(' -"' #-<%1.' 1"(' +<-"-B%<' @+.;10+E' 78+' B+1#&0+#'
$1K+"' @+0+' -;$+"' #&;;%<%+"$' $-' -4+0<-B+' $8+' (+B1"(' <0%#%#' 1"(' 0+#&.$+(' %"' /&%<K'
0+<-4+0GE' 78%#' (-+#' "-$' B+1"' $81$' +<-"-B%<' <0%#+#' @-&.(' 814+' "-' B1F-0' %BA1<$#' -"'
;+(+01.%#BE'J+' (++B'%$'"+<+##10G'$-' (%#$%"9&%#8'^#$0-"9'<0%#%#_'1"(' ^@+1K'<0%#%#_2'@%$8'
$8+'.1$$+0':+%"9'<8101<$+0%[+(' :G'1'.-"9+0' .1#$%"9'(+$+0%-01$%-"'-;' +<-"-B%<'<-"(%$%-"#'
.+1(%"9'$-'(&01:.+'"+91$%4+' +;;+<$#' -"'+<-"-B%<'1"('#-<%1.'@+.;10+E' 78+' 91B+':+$@++"'
;+(+01.'1<$-0#'(%;;+0#'1<<-0(%"9'$-'$8+'$GA+'-;'<0%#%#S+
78+'@+1K'<0%#%#'@+'814+'(+#<0%:+('%"'$8%#'10$%<.+'1;;+<$+('$8+'^<1A1<%$G'$-'1<$_'-;'$8+'UQ'
1#' $8+' B1%"' 0+#A-"#%:.+' 19+"<GE' !"' ;+(+01$%-"#2' $8%#' <1A1<%$G' (+A+"(#' $-' (%;;+0+"$'
(+90++#' 1"(' @1G#' -"' $8+' <--A+01$%-"' -;' VWE' 78+' 91B+' $81$' %#' A.1G+(' 8+0+' %#' 1'
^<--0(%"1$%-"'91B+_' @%$8' 1'.-@' (+90++'-;' <-";.%<$E' e+(+01.' <-&"$0%+#' (%;;+0'%"' $8+' @1G'
$8+G'(+1.'@%$8'$8+'<0%#%#'1"('%"'$8+'@1G'$8%#'1;;+<$#';+(+01.'0+.1$%-"#E'k+$'1#'1'0&.+'$8+0+'
10+'T'1#'@+'814+' (+#<0%:+(' T'B%"-0'1(F&#$B+"$#2'#GB:-.%<'#$0+"9$8+"%"9'-;'UQ2' #+10<8'
;-0'$1<$%<1.' 1(41"$19+#' 1"('#K%0B%#8+#E'Z&$' 1..'$8%#'81#'"-$2' 1$'.+1#$'"-$' 1#'G+$2'.+('$-' 1'
#8%;$'%"'$8+':1.1"<+'-;'A-@+0E'78%#'A0+#&B1:.G'@%..':+'(%;;+0+"$'%"'1'#$0-"9'<0%#%#E'3"(+0'
$8+#+' <-"(%$%-"#'"-$' -".G' $8+' ;%"1"<%1.' A-$+"$%1.' -;' VW' :&$' 1.#-' -;' $8+' UQ' B1G' :+' %"'
(1"9+0E'!"'$%B+#'-;'#+0%-&#';%"1"<%1.'A0+##&0+'1"('1'#+4+0+'(+$+0%-01$%-"'-;'$8+'+<-"-B%<'
(+4+.-AB+"$2'$8+'%"$+09-4+0"B+"$1.'91B+'B1G'<81"9+E']"+'<1"'+HA+<$'-"'$8+'-"+'81"('
1$$+BA$#' $-' 0+L(%#$0%:&$+' ;%"1"<%1.' 1&$8-0%$G' %"' ;14-0' -;' $8+' UQ' %"' -0(+0' $-' 91%"' B-0+'
.+4+019+' $-' #-.4+' $8+' <0%#%#' 1"(' -"' $8+' -$8+0' 81"(' B-0+' 1$$+BA$#' $-' 0+9&.1$+' $8+'
:+814%-0'-;'VW'%"'-0(+0'$-'14-%('-AA-0$&"%#B'(&0%"9'$8+'<0%#%#E'78+0+'10+'%"(%<1$%-"#';-0'
#&<8'1'(+4+.-AB+"$'%"'$8+';+(+01.'<-&"$0%+#' -;' $8+' *&0-Lp-"+'@8+0+'(+:$'0+9&.1$%-"'-;'
VW' :+<1B+' $8+' B1%"' B+1#&0+' $-' <-A+' @%$8' $8+' %BB%"+"$' +<-"-B%<' %"#$1:%.%$GE' d+L
(%#$0%:&$%-"' 1"(' 0+9&.1$%-"' %9"%$+'%"$+"#+' <-";.%<$#' 1"(' $8+0+;-0+' <1&#+'<-";0-"$1$%-"#'
1:-&$'1&$8-0%$G'%"'$8+';+(+01$%-"E''
16
78+'<-"#+/&+"<+#'A0-:1:.G'410G':+$@++"'$8+'(%;;+0+"$'$GA+#' -;' ;+(+01.' #$1$+#'@+'814+'
(%#<&##+(E' Z&$' %$' %#' .%K+.G' $81$' 1' #+0%-&#' <0%#%#' @%..' .+1(' $-' #%9"%;%<1"$'<81"9+#' %"' $8+'
:1.1"<+' -;' A-@+0#E' WGB:-.%<' :--#$' -;' $8+' UQ' B1G' :+' &#+(' $-' <.1%B' 0+;-0B#' %"' ;%#<1.'
0+.1$%-"#P' $+BA-010G' 0+(&<$%-"' -;' (%#<0+$%-"' B1G' $&0"' %"$-'^1&$8-0%$G' B%901$%-"' :G'
#$+1.$8_P' 1<$#' -;' (+;%1"<+' ;0-B' $8+' A10$' -;' UQ' B1G' :+<-B+' 1' 0+9&.10' #$01$+9GP'1"('
(%#A&$+#' 1:-&$' <-BA+$+"<+#' B1G' :+' <-"$%"&1..G' -"' $8+' A-.%$%<1.' 19+"(1E' 78+' -"L9-%"9'
%"$+0"1$%-"1.';%"1"<%1.'<0%#%#'B1G'A0-4%(+'1"'-<<1#%-"'$-'$+#$'@8+$8+0'$8+#+'<-"F+<$&0+#'
A0-4+'$-':+'@0-"9'-0'0%98$E'
'
d*e*d*cU*W'
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... A few scholars of comparative federalism have researched the impact of economic and financial crises on federal relations. Mainly, these authors have underlined the fact that central governments' anti-crisis policy management leads to centralization of fiscal powers (Bordo et al., 2013), at least temporarily (Braun and Trein, 2013b). Further research has qualified this assessment and suggested that in countries with high federal transfers to subnational governments, centralization occurs in the long run. ...
... Due to its combination of fiscal decentralization and a strong consensus culture, Swiss federalism has, so far, proven to be a particularly robust federation (Bednar, 2009) in times of crisis. Other federal countries, such as Spain, faced significantly more problems and challenges of the federal order (Braun and Trein, 2013a, 2013b). ...
... In non-decentralized federations, the possibilities of overawing by the federal government are higher (Braun and Trein, 2013b). For example, in 'tax-shared regimes', such as Argentina, Spain, Belgium, India or Spain, subnational governments have few exclusive tax powers. ...
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This article examines federal dynamics during times of crisis in fiscally decentralized federations using Switzerland as an example. Based on qualitative research, we analyse how the relationship between the federal government and the cantons evolved during the recent ‘Great Recession’ and ensuing financial crisis. We contend that fiscally decentralized structures, as well as the consensus-oriented institutions of the political system, protect the federal balance of power. Our results show that Switzerland indeed adapted well to the crisis of the 2009 economic recession. However, the deficit crisis has revealed challenging coordination problems, notably in the areas of fiscal equalization and corporate taxation, which have the potential to put federal stability under stress. So far, the system has adapted well and safeguarded the federal order. Due to its combination of fiscally decentralized institutions and a strong consensus culture, Switzerland has proven to be a particularly robust federation.
... The national level is also typically in charge of macro-economic policy in federal states (cf. also Braun and Trein 2013). However, strong sub-national governments present a political obstacle which even the most unified, reform-oriented, liberal-Keynesian central government might have difficulties to overcome. ...
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... Research on multilevel governance and federalism has pointed out that levels of government beyond the nation state play an increasingly important role in policymaking and share authority with the national government (Hooghe et al. 2016;Hooghe and Marks 2003). In times of crisis, the momentum for action moves to the national government and there is a temporary centralization of powers from subnational to the central level of government, in order to allow for a coherent response to the policy problems (Dietmar Braun andTrein 2013, 2014). Individuals approve that the central government, rather than subnational governments, take charge against the crisis because they prefer a coherent policy response (Amat et al. 2020). ...
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... It was beyond question that constituent units of the federation needed to resolve their problems on their own. In other words, central government policy measures pooled sovereignty at the centre temporarily, but constituent units received compensation in terms of direct and indirect transfers and were bailed out financially if necessary (Braun & Trein 2013b, 351) (Braun & Trein 2013a, 144-151). Central governments covered over-borrowing of regions, for example in Argentina, Germany, or India. ...
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In this article, I analyse solidarity between regions during times of crisis. To begin with, I define two types of solidarity preferences. Negative solidarity means that territories will regard solidarity only as appropriate in the limits of intergovernmental contracts and consider the fiscal consequences of solidarity to be more important than the social consequences. Positive solidarity implies that regions consider solidarity even if it goes beyond existing intergovernmental contracts as they regard social consequences to be more important than fiscal consequences. I argue that the combination of regional collective identities, the relative importance of intergovernmental over parliamentary decision-making, and the complexity of policy problems impact on preferences for solidarity. To illustrate my argument empirically, I use the European Union (EU) and federal states as examples. More generally, I make a theoretical contribution to understanding the politics of solidarity.
... However, now its shared-rule with the EU is more illuminating. Germany's type of federalism has been described in numerous ways that pinpoint to its structural distribution of competences as well as the outcomes of this distribution: as "cooperative federalism" (B€ orzel, 2002;Jeffery, 2002;Scharpf, 2008), as "interlocking federalism" (Scharpf, 1988), as "federal with a stable equilibrium" (Braun & Trein, 2013), "unitary federal state" (Schmidt, 2016), "entangled multilevel policy-making" (Kropp & Behnke, 2016), "joint federalism" (Biela et al., 2013), and "integrated federalism" (Hueglin & Fenna, 2015). Germany's federalism is characterized by the commitment to consensus and harmonization between the L€ ander and the federal government on policy formulation, and this is in contrast to other types of federalism, such as the United States (Behnke & Mueller, 2017), contributing to its problem-solving capacity from a process angle. ...
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This paper analyzes the crisis politics in the European Union (EU) in comparison to federal states. I assume that – despite obvious differences – the EU faces similar policy challenges as federal states in times of crisis. At the same time, federal states are similar to the EU because intergovernmental conflict and cooperation appear in times of crisis. In taking federations as contrasting cases to the EU, I argue that during times of crisis, in the EU, politics of solidarity are politics of “negative solidarity.” Politics of negative solidarity are all about the limitations of solidarity and member state sovereignty. Member states consider solidarity (e.g. mutual financial support) according to a logic of appropriateness. In contrast, crisis politics in federal states are politics of “positive solidarity”, according to which member states give little emphasis to the limitations of support between constituent units and consider solidarity according to a logic of consequences.
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Is it always true that decentralization reforms put more power in the hands of governors and mayors? In post-developmental Latin America, the surprising answer to this question is no. In fact, a variety of outcomes are possible, depending largely on who initiates the reforms, how they are initiated, and in what order they are introduced. Tulia G. Falleti draws on extensive fieldwork, in-depth interviews, archival records, and quantitative data to explain the trajectories of decentralization processes and their markedly different outcomes in Argentina, Brazil, Colombia, and Mexico. In her analysis, she develops a sequential theory and method that are successful in explaining this counterintuitive result. Her research contributes to the literature on path dependence and institutional evolution and will be of interest to scholars of decentralization, federalism, subnational politics, intergovernmental relations, and Latin American politics.
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This paper examines the impact of the global financial crisis on South Africa, in particular on how the highly centralized federal system absorbed and responded to the crisis. The arguments are that the global crisis and the recession that followed have exacerbated long-standing structural problems in the economy, and that the state’s response to the crisis again highlighted the highly centralised nature of the country’s fiscal constitution. One section of the paper explores the impact of the financial crisis on the economy and the three orders of government. Another section examines how each sphere responded to the crisis. A final section assesses the impact of those responses on the political economy of the country and the workings of the federal system, concluding with a speculation on the long term legacy of the global crisis.