I formulate a political-economy model of a fiscal union where the threat of secession imposes a limit on fiscal redistribution between regions. I argue that the trade-off between implementing the region's preferred fiscal policy and benefiting from inter-regional risk sharing depends on the...

This study analyses the extent of fiscal risk sharing and redistribution for Austria from 2000 to 2019. Overall, fiscal policy smooths about one tenth of regional GDP shocks. While this is primarily driven by the federal budget and social security funds, there is also a significant contribution...