This paper expands analytical material prepared for the 2006 Public Finance in EMU European Commission report. Earlier versions benefited from insightful comments by Elena Flores and Servaas Deroose, and participants to the European Commission workshop on ‘The Role of National Fiscal Rules and Institutions in Shaping Budgetary Outcomes’, Brussels, 24 November 2006, and to the Banca d’Italia workshop on ‘Fiscal Policy: Current Issues and Challenges’, Perugia, 29–31 March 2007. We are particularly grateful to three anonymous referees and to our discussants, Alan Drazen and Clemens Fuest, for detailed comments and invaluable suggestions that led to substantial improvements in the paper. The views expressed in this paper are the authors’ own and do not necessarily reflect those of the European Commission or the IMF.The Managing Editor in charge of this paper was Giuseppe Bertola.
Tied to the mast? National fiscal rules in the European Union
Article first published online: 18 MAR 2008
© CEPR, CES, MSH, 2008
Volume 23, Issue 54, pages 297–362, April 2008
How to Cite
Debrun, X., Moulin, L., Turrini, A., Ayuso-i-Casals, J. and Kumar, M. S. (2008), Tied to the mast? National fiscal rules in the European Union. Economic Policy, 23: 297–362. doi: 10.1111/j.1468-0327.2008.00199.x
- Issue published online: 18 MAR 2008
- Article first published online: 18 MAR 2008
National fiscal rules
Numerical fiscal rules implemented at the national level in member countries of the European Union offer useful information on possible reasons for the growing reliance on such rules, and on their implication for fiscal policy. Our analysis of a survey-based dataset suggests that both the introduction of the EU fiscal framework and country-specific fiscal governance features played a role in triggering introduction of numerical fiscal rules, and that the impact of rules is statistically significant, robust, and quantitatively important. Outcomes and rules may be jointly determined by unobserved political factors, but the evidence suggests that causality runs from rules to fiscal behaviour, and that rules specifically designed to prevent conflicts with the stabilization function of fiscal policy are indeed associated with less pro-cyclical policies.
— Xavier Debrun, Laurent Moulin, Alessandro Turrini, Joaquim Ayuso-i-Casals and Manmohan S. Kumar