Abstract:  Recent comparative fiscal federalism work has noted how the US displays a mix of substantial federal capacity and no federal fiscal rules for sub-federal units as opposed to the EU’s mix of regulation and lack of capacity. The difference is explained by the lack of federal capacity in the EU case, which presumably creates a need for regulation. However, these studies are cross-sectional. This carries the obvious drawback of abstracting the actual political and historical processes that have given rise to the respective mixes of regulation and capacity in the two polities. In this article, I trace the historical process by which the specific mix of no rules and capacity became entrenched in the US in the second half of the 20th century and ask whether that political-economic history has any lessons for the EU today.

Keywords:  comparative federalism; fiscal capacity; fiscal federalism; fiscal rules; political development

Published:   27 October 2023

Issue:   Vol 11, No 4 (2023): Comparative Fiscal Federalism and the Post-Covid EU: Between Debt Rules and Borrowing Power