Arbeitspapier

Enforcement of fiscal rules: Lessons from the fiscal compact

In 2012, 22 EU countries signed the Fiscal Compact, an intergovernmental agreement aimed at backing EU fiscal rules with national arrangements. The main objective of the Compact was to strengthen compliance. Based on a survey of national independent fiscal institutions, we take a closer look at the correction mechanism, the core of the Fiscal Compact. As the name suggests, the correction mechanism is meant to automatically trigger fiscal adjustment in case public finances deviate from 'the path of virtue'. While design choices vary considerably across countries, a cluster analysis reveals distinct patterns. In particular, better compliance tend to be associated with a superior design of the correction mechanism, higher government efficiency and a stronger media presence of independent fiscal institutions. Economic growth can make up for a less sophisticated design. Additional inferential analysis confirms the link between compliance, design and other relevant valiables. Our survey also indicates that many countries have linked the trigger of the correction mechanism to formal decisions at the EU level rather than to independent assessors at the national level. This choice defeats the original purpose of correction mechanisms, namely to decouple key fiscal policy decisions from political considerations and discretion.

Sprache
Englisch

Erschienen in
Series: ZEW Discussion Papers ; No. 21-085

Klassifikation
Wirtschaft
Fiscal Policy
National Deficit; Surplus
Forecasts of Budgets, Deficits, and Debt
Intergovernmental Relations; Federalism; Secession
Thema
Fiscal policy
fiscal governance
budgetary forecasts
correction mechanism
Fiscal Compact
independent fiscal institutions
fiscal councils

Ereignis
Geistige Schöpfung
(wer)
Larch, Martin
Busse, Matthias
Jankovics, László
Ereignis
Veröffentlichung
(wer)
ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
(wo)
Mannheim
(wann)
2021

Handle
Letzte Aktualisierung
10.03.2025, 11:45 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Larch, Martin
  • Busse, Matthias
  • Jankovics, László
  • ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung

Entstanden

  • 2021

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