Introduction

This chapter focuses on the discussion of fiscal policy, which can be defined simply as 'the government's plan for spending and taxation'. Fiscal policy has since then become a synonym for the use of the public budget in order to stabilise the macroeconomic situation. In the federal arena, fiscal measures lead almost always to a change both in the distribution of resources and tasks between the federal government and subgovernments. This chapter determines the relationship between federalism and fiscal policy-making may be generalised across federal countries. It is believed that the capacity of federal government to act and coordinate in fiscal policy-making will demonstrate not only the constraints federal structures impose on federal fiscal policy-making but also the different potentials to act of federal systems in general. The chapter also presents an overview of key concepts discussed in the subsequent chapters of this book.