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

Author/Editor: Serhan Cevik
Publication Date: June 01, 2011
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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.
Series: Working Paper No. 11/147
Subject(s): Debt sustainability | Fiscal sustainability | Hydrocarbons | Natural resources | Public debt | Taxation

Author's Keyword(s): Fiscal imbalances | business cycles | cyclically-adjusted budget balance | debt sustainability | fiscal federalism | contingent liabilities | statement of fiscal risks
Publication Date: June 01, 2011
ISBN/ISSN: 9781455269457/1018-5941 Format: Paper
Stock No: WPIEA2011147 Pages: 23
US$18.00 (Academic Rate:
US$18.00 )
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