Does Eurozone Membership Strengthen the Significance of Fiscal Instruments?

Slawomir Franek and Marta Postula ()
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Marta Postula: Faculty of Management, University of Warsaw

Annals of Economics and Finance, 2020, vol. 21, issue 1, 131-151

Abstract: This paper investigates the relationship between fiscal instruments (such as numerical fiscal rules, independent fiscal institutions and medium-term budgetary frameworks) and fiscal performance of EU countries. An empirical analysis using panel data estimation method reveals a statistically significant and positive impact of the use of fiscal instruments on the fiscal stance. The results obtained warrant the conclusion that the use of multiannual budgetary framework has the strongest (among all fiscal instruments) impact on the budget balance. In addition, there is no clear evidence that an EU country's eurozone membership guarantees better fiscal performance and stronger fiscal instruments. This conclusion also proves justified upon excluding the impact of fiscal reform implemented in those EU member states that joined the eurozone in the period under analysis.

Keywords: Fiscal policy; Eurozone; Budgetary frameworks (search for similar items in EconPapers)
JEL-codes: E62 H11 H61 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:cuf:journl:y:2020:v:21:i:1:franekpostula

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