ABSTRACT
Introduction The United States is a decentralized federation in which the states enjoy a high level of fiscal autonomy. Moreover, the United States is the only federation in our sample where fiscal equalization is nearly absent. Consequently, the states are fully responsible for their fiscal policies and entirely accountable to the markets. However, federal pre-emption and the use of unfunded mandates have led to a considerable centralization of power in the hands of the federal government and decisions taken at the federal level affect the states despite a dual distribution of power (Börzel and Hosli 2003).
