Sustainable Fiscal Policy in a Federal State: The Swiss Example

Authors

  • Gebhard Kirchgaessner

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    1. University of St. Gallen
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    • Gebhard Kirchgässner, geboren 1948, ist seit 1992 Ordinarius für Volkswirtschaftslehre und Ökonometrie an der Universität St. Gallen und Direktor des dortigen Schweizerischen Instituts für Aussenwirtschaft und Angewandte Wirtschaftsforschung (SIAW-HSG). Er ist Research Fellow des internationalen Netzwerks CESifo sowie Mitglied der Sektion Ökonomik und Sozialwissenschaften der Deutschen Akademie der Naturforscher Leopoldina, Halle. Seit 1997 ist er Mitglied und seit 2004 Präsident der Kommission für Konjunkturfragen des Schweizerischen Bundesrats. Seine Forschungsschwerpunkte sind: Neue Politische Ökonomie, Energieund Umweltökonomik, Angewandte Ökonometrie sowie Methodische Grundlagen der Wirtschafts- und Sozialwissenschaften.


Universität St. Gallen, SIAW-HSG, Bodanstrasse 8, CH-9000 St. Gallen. E-mail: Gebhard.Kirchgaessner@unisg.ch

Abstract

Using a small theoretical model it is first shown that it is reasonable to limit public deficit and debt in relation to GDP in the long-run. Then we describe fiscal institutions called ‘debt brakes’ which are designed to prevent public deficit and debt from going off course. We present some models which have been applied in some Swiss cantons, especially in the canton St. Gallen, and the respective institution recently introduced at the federal level. Altogether, the models in the different cantons are quite successful. At the federal level we still have to wait before we can evaluate the results. Finally, we describe how the problem of a possible bail out of cantons and local communities is solved in Switzerland. Taking all results together, we come to the conclusion that by choosing appropriate institutions federal countries are rather more able to perform a sustainable fiscal policy than unitary states. In this process, budgetary restrictions and/or fiscal referenda play prominent roles at all levels. On the other hand, a special stability pact between the different governmental levels does not seem to be necessary.

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