Policy Coordination in Fiscal Federalism: Drawing Lessons From the Dubai Debt Crisis

June 1, 2011

Preview Citation

Format: Chicago

Serhan Cevik. Policy Coordination in Fiscal Federalism: Drawing Lessons From the Dubai Debt Crisis, (USA: International Monetary Fund, 2011) accessed December 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Using the cyclically adjusted non-hydrocarbon primary balance, this paper investigates the evolution of the fiscal policy stance in the United Arab Emirates at consolidated and sub-national levels in the run-up and after the crisis. The empirical findings show that procyclical fiscal policies prior to the crisis reinforced the financial sector cycle, exacerbated the economic upswing, and thereby contributed to the build-up of macro-financial vulnerabilities. The paper also sets out policy lessons to develop a rule-based fiscal framework that would help strengthen fiscal policy coordination between the various layers of government and ensure long-term fiscal sustainability and a more equitable intergenerational distribution of wealth.

Subject: Expenditure, Fiscal policy, Fiscal stance, Fiscal sustainability, Public debt

Keywords: Budget deficit, Business cycles, Contingent liabilities, Cyclically-adjusted budget balance, Debt brake mechanism, Debt sustainability, Dubai debt crisis, Emirate government level, Emirate level, Emirates GDP, Federal government, Fiscal federalism, Fiscal imbalances, Fiscal policy stance, Fiscal stance, Fiscal sustainability, Global, Net financing need, Potential GDP, Statement of fiscal risks, U.A.E. constitution, U.A.E. economy, WP

Publication Details

Pages:

23
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2011/147
Stock No:

WPIEA2011147
ISBN:

9781455269457
ISSN:

1018-5941

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