From discretion to rules? The fate of budgetary management reforms in Slovakia and Hungary

Dóra Győrffy ()
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Dóra Győrffy: Péter Pázmány Catholic University Department of Economics Budapest Hungary

Society and Economy, 2012, vol. 34, issue 4, 581-597

Abstract: The main question of the paper, in the context of European economic governance reforms, is to assess whether strengthening fiscal institutions will resolve the problem of budgetary imbalances in countries prone to the deficit bias. The central argument is that the commitment behind the institutional changes — signaled by the composition of fiscal consolidation and the role of external actors — is critical for the success of reforms. In order to examine this thesis the contrasting experiences of Hungary and Slovakia are analyzed. While both have struggled with fiscal imbalances and eventually introduced far-reaching institutional reforms, these were successful in Slovakia while reversed in Hungary. The major implication of these cases is that changes in fiscal management cannot be treated as mere technicalities and are inseparable from the broader economic policy agenda. In countries where short-term considerations dominate decision-making, rules are implemented only under strong external pressure and are likely to be circumvented.

Keywords: fiscal rules; deficit bias; institutional reforms; Hungary; Slovakia (search for similar items in EconPapers)
JEL-codes: H61 P16 (search for similar items in EconPapers)
Date: 2012
Note: An earlier version of this paper was presented at the conference “Exploring experiences – Good governance exchange on the frontiers of Europe” at Central European University, Budapest, April 29, 2011. With the usual caveats I am grateful for insightful comments by László Csaba, Wade Jacoby, Gergő Medve-Bálint and an anonymous reviewer. The writing of this paper was sponsored by the TÁMOP 4.2.1 B-11/2/KMR-2011-0002 grant of the Hungarian government and the European Union.
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