infonet-economy

The chapter wants to…
- outline the "deutsche Problem" of fiscal federalism in international comparison
- discuss impact of financial crisis on framework of German federalism
- identify options of possible next steps in German fiscal federalism

The chapter argues that…
- the financial market crisis has triggered some institutional changes in German fiscal federalism
- the main effects of those changes will become apparent towards the end of this decade only, when states must present structurally balanced budgets
- market participants start to perceive changes in the German system, but still believe in a bailout-guarantee by the Federation
- no coherent strategy for a systemic overhaul is in sight