Supreme Audit Institutions and Sustainability of Public Finance. Links and Evidence along the Economic Cycles

Ionel Bostan, Mihaela Tudose (), Raluca Irina Clipa, Ionela Corina Chersan and Flavian Clipa
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Ionel Bostan: Faculty of Law and Administrative Sciences, Ștefan cel Mare University, Universitatii 13, 720229 Suceava, Romania
Raluca Irina Clipa: Faculty of Economics and Business Administration, Alexandru Ioan Cuza University, Carol I 20A, 700505 Iasi, Romania
Ionela Corina Chersan: Faculty of Economics and Business Administration, Alexandru Ioan Cuza University, Carol I 20A, 700505 Iasi, Romania
Flavian Clipa: Independent Researcher, 700505 Iasi, Romania

Sustainability, 2021, vol. 13, issue 17, 1-24

Abstract: Against the backdrop of concerns for diminishing the vulnerabilities of the economies of the Member States, the EU has adopted measures to strengthen budgetary discipline and control of the public deficit. In this context, the responsibility of government institutions has increased, not only in ensuring the sustainability of public finances but also in direct or indirect cooperation for good economic governance. From this perspective, this study aims to assess the impact of macroeconomic variables and those associated with supreme audit institutions on the sustainability of public finances measured by the size and dynamics of government deficit and gross public debt. Additionally, the impact of the same variables on governmental effectiveness and control of corruption has also been assessed. The data collected from secondary sources and panel data models were used to conduct an empirical study of the EU Member States which covered the 2002–2019 period and the sub-periods, divided as follows: pre-crisis, crisis, and post-crisis. The results of the study show that supreme audit institutions, through their organizational structure, the nature of their activities, and professionalism, may contribute to the reduction of public deficit and gross public debt and, implicitly, to higher efficiency and control of corruption. The results of analyses for the sub-periods show that ISAs played a more important role in reducing government deficit during crisis and post-crisis periods. By confirming or rejecting the results of the few studies that have been conducted so far, this study provides additional evidence that fills the gaps in the literature.

Keywords: government deficit; public debt; sustainability; government effectiveness; control of corruption; macroeconomic variables; European Union (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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