ABSTRACT
This introduction presents an overview of key concepts discussed in the subsequent chapters of this book. The book examines the fiscal arrangements between the central and subnational governments in federations from the perspective of the center. In that sense, it differs from most of the literature on fiscal federalism, which largely focuses on the devolution of fiscal responsibilities to the subnational level. But the Great Recession, by reigniting the debate on the counter-cyclical role of fiscal policy, has brought to the fore the question of the role of central governments in countries with a decentralized fiscal framework and of the instruments they could use to safeguard macroeconomic stability and the sustainability of public finances. Moreover, the book describes prevailing practices but does not assess performance under those practices, so its findings should not be interpreted as normative statements. When relevant, it explores this parallelism and compares the situation in federations with that in the European Union (EU).
