Chapter 10 looks into the consequences of both financing and choice of consumption expenses and investments in infrastructure given the more open economies. The possible influence on the ability to ensure income from taxes and duties in a global world is presented. The focus is on the impact of globalization, but also the possible restrictions on national abilities to decide on the economic policy, including the ability to decide on national levels of taxation. There is a special focus on the countries covered by the Economic and Monetary Union (EMU) within the European Union (EU), where a closer look is taken at how the rules herein can influence the development of the public sector, and also discussing the logics of the rules. The requirements and size of the general government budget deficit and debt impact on the general government sector are discussed. The global functioning of markets and economies can create options, but also reduce the degree of freedom to finance the public sector, including tax competition.
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