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Federal Balance and Economic Stability *
Author(s) -
MATHEWS RUSSELL
Publication year - 1978
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.1978.tb00328.x
Subject(s) - balance (ability) , economics , settlement (finance) , human settlement , government (linguistics) , wage , labour economics , finance , geography , medicine , linguistics , philosophy , archaeology , payment , physical medicine and rehabilitation
The paper examines the concepts of and the conditions for vertical and horizontal fiscal balance in a federal system, with special reference to intergovernmental grants arrangements and the effects of open‐ended settlements on the stability of the system. The notions of vertical balance, horizontal balance and open‐endedness are then applied to other aspects of economic policy, in particular the formulation of budgetary policy by a single government and the settlement of wage claims. It is suggested that economic instability in Australia during recent years has been associated with two forms of horizontal imbalance, resulting from institutional factors which have encouraged open‐endedness in the process of determining budget priorities on the one hand and open‐endedness in wage bargaining on the other.