Determinants of budget deficits in Europe: The role and relations of fiscal rules, fiscal councils, creative accounting and the Euro

Dominik Maltritz and Sebastian Wüste

Economic Modelling, 2015, vol. 48, issue C, 222-236

Abstract: We analyze the determinants of the budget balance of 27 EU countries from 1991 to 2011 with a panel approach. Our focus is on the effectiveness of fiscal rules and fiscal councils as well as the impact of EMU membership and creative accounting, approximated by stock-flow-adjustments. We especially contribute to the literature by analyzing the joint influence of fiscal rules with fiscal councils and stock-flow-adjustments, measured by their interaction terms. We find a significant influence for fiscal rules and stock-flow-adjustments and as well as under crisis conditions for fiscal councils. Also the interaction variables display influence.

Keywords: Budget balance; Fiscal deficit; Fiscal rules; Fiscal councils; Creative accounting; European Monetary Union (search for similar items in EconPapers)
JEL-codes: E62 F34 F55 H61 H62 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (50)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:48:y:2015:i:c:p:222-236

DOI: 10.1016/j.econmod.2014.12.001

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