Upon the determination of the mechanism of the fiscal policy, the focus of presentation is in terms of the intergovernmental aspect of the said process. As what had been mentioned, the need for reform had occurred in the history of the US. Fiscal federalism made its way both on the basis of the need of the nation and the evolution of the processes. Primarily, changes occur in the local and domestic economic systems. Upon the adaptation of the said changes, the interaction with the outside forces was also modified.
The areas that are involved in the modification are the public aims, the political association and partnership, the public approach in governance and the initialization of the action related to intergovernmental agenda (Swartz and Peck, 1990). In the study of the continuous change and transformation of the US, one of the important queries is the diving force of such trend. One of the views is the continuous decline of the international control of the US over the world economy.
For that matter, the intergovernmental relationships in terms of the fiscal issues are considered vital to the survival of the US economy. The said position of the states that affect the economy then cannot be considered to be solely limited to the economic aspect. As a basic knowledge, the economy can be considered as one of the most important fuel for the machinery of governance in a country. The importance of the economic policies then ultimately targets the stability of the nation. B. The Vertical Perspective
In the study of the fiscal process in the government is the vertical perspective. This can be attributed to the different levels in the application of the fiscal policy. The main view in the said process is the hierarchy the commands which can also be related to the segregation of the responsibilities at the different ranks. The importance of the responsibility of the personnel at different levels of the government is a vital factor regardless of the leadership and the era to where the issue belongs.
The responsibility of the different agencies and institutions are important in the stability of the country. The proper segregation of tasks is still the most important aspect. It involves the determination of the actions that are needed to be undertaken by the local, state, central leadership or international organization and even an institution (Olson, 1969). The importance of the vertical intergovernmental relationship is also stressed by Murakami (2005). The study that was undertaken involves a multi-region coverage in terms of the growth model in productivity of governance.
When it comes to the vertical aspect mainly the application of the fiscal policy at the different levels of governance, the most important action and notion can be considered as the fiscal decentralization of the taxes. This can be considered as only one of the factors that are needed to be considered in the study of the vertical intergovernmental relationships. The monitoring involves the optimal tax rates in the national and local perspectives which can be considered as a basis for economic growth rate.
The result of the study leans on the economic growth on the basis of the vertical fiscal decentralization (Murakami, 2005). The fiscal decentralization can be considered as a factor that can improve the efficiency of the economy. The notion was based on a controlled economic set-up but the results can then be considered to vary by a certain degree from the dynamic set up in the real economic arena. Thus, the increase in efficiency is possible (Oates, 1993).