Institutional and Political Dimensions of Fiscal Federalism in the Multilevel Government, the U.S. Case

The provision and financing of public－sector programs by nature have important institutional, political and economic dimensions, thus varying from one country to another, or even within the same country from one administration to another. Various factors may channel the process of shifting the locus of fiscal responsibilities, including politico－economic system, levels of economic development, and/or legal－constitutional traditions. Identifying all of these factors may be formidable if not impossible, but precisely because fiscal institutions are dependent on this multitude of factors, it is worthwhile exploring how we may account for why the level of fiscal centralization varies significantly in a group of countries despite several obvious similarities they share. In this paper, I propose an explanatory model by highlighting institutional and political dimensions of fiscal federalism in developed federal states and then focus on the United States of America to see how the issues of intergovernmental fiscal relations emerged in recent years.