Countries: Ireland, Netherlands, Belgium, Germany, Luxembourg, France, Spain, Portugal, Finland, Estonia, Slovakia, Austria, Slovenia, Italy, Malta, Greece, Cyprus.
The integration of the fiscal policy of the states or nations is known as Fiscal Union. Decision about expenditure and collection of taxes under fiscal union decisions are taken by common institutions which are also shared by the governments (Bordo, Markiewicz and Jonung 2011).
Fiscal Federalism is a complex concept and does not have a single definition. It includes the following five components; 1) Hard budget constraints are faced by these government which means that with the ideal type there is no bail-out rule 2)autonomy or independence is faced by the sub-central political entities to decide on expenditures and taxes 3) within the fiscal union there is a common marked which is based on mobility and free trade hence among the sub-central government there is a scope for competition 4) the central authorities and the sub-central are the members of the same monetary union and the common market is based on the common currency (Jason 2008).
A group of states which share a single currency is known as a Monetary Union. A monetary union in the strictest sense of the term means separate national currencies or complete abandonment of regions and centralizing completely the monetary authority into a single joint institution. This is regarded as euro area which is considered to be a subset of the Economic and Monetary Union (EMU) (Bordo, Markiewicz and Jonung 2011).
Two important policy of EU. There are two elements which makes the stature unique in the world. First, the feral budget, it is a smaller number because it is about 1%of the total national incomes of the 27 members state. Secondly, the monetary policy is centralized and the Budget is decentralized. This structure has basically three functions referring to Musgrave that is allocation or the efficacy, distribution and stabilization (Iain 2009).