Regulatory Unification and Centralization in Fiscal Policy: A Fuzzy-Set Analysis

This paper examines regulatory unification and centralization of fiscal policies during the financial and economic crisis, from 2007 - 2012, in 11 federal states. The paper starts with the scenario that, in most countries in this sample, anti-crisis policies came along with a temporary increase in the national government's power, but only in some there was a more permanent unification of fiscal rules or even a shift of substantial fiscal discretion to the national level. I use fuzzy-set QCA methodology to analyze how configurations of budget pressure, institutions of "shared fiscal rule," bicameralism and party congruence, as well as international factors explain patterns of regulatory unification and centralization in fiscal policies during times of crisis. My findings show that budgetary crisis pressure, federal politics, and international political forces, as well as the presence of a transfer regime and a bailout history in "shared fiscal rule," are sufficient for the centralization of fiscal policies, but only the latter are necessary for it. The results imply that some federations are at risk of "centralization by stealth" during the crisis period, which comes along with fiscal policymaking in the shadow of formal institutions of power sharing between regions and the national government.