Fiscal rules as institutional tools for public debt management in the European Union Member States

Stawiarska Katarzyna ()
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Stawiarska Katarzyna: Cracow University of Economics, College of Economics, Finance and Law, Rakowicka 27, 31-510 Cracow, Poland

Central European Economic Journal, 2023, vol. 10, issue 57, 414-428

Abstract: This paper aims to assess the impact of the second-generation numerical fiscal rules on the effectiveness of public debt management in the Member States of the European Union. The research was conducted using dynamic panel models on a sample of 27 EU Member States over the period 2008–2021. The effectiveness of public debt management was determined by the level of public debt servicing costs, considering not only the impact of the quality of numerical fiscal rules on interest payments, but also other factors influenced by these rules, such as the quality of fiscal policy, the solvency of public finances and the quality of institutional governance. The motivation for this topic was to evaluate the effectiveness of the second-generation numerical fiscal rules following the changes made to their design in the context of the reconstruction of the EU fiscal surveillance system after the global economic and financial crisis of 2008–2010. The research has found that strong numerical fiscal rules improve the effectiveness of public debt management. In addition, stable fiscal policy and higher solvency of public finances, as well as political stability and the absence of violence, are conducive to lower public debt servicing costs. This paper enriches the literature by extending it with a new approach to fiscal rules, highlighting their multifaceted impact on the quality of public debt management.

Keywords: fiscal rules; public debt management; fiscal policy; public finances solvency; institutional governance (search for similar items in EconPapers)
JEL-codes: H30 H62 H63 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:ceuecj:v:10:y:2023:i:57:p:414-428:n:21

DOI: 10.2478/ceej-2023-0024

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