FISCAL COUNCILS IN EU MEMBER STATES: IMPACT ON FISCAL DISCIPLINE

Martin Gorčák and Stanislav Šaroch

Prague Economic Papers, 2022, vol. 2022, issue 5, 327-346

Abstract: This paper presents the impact of fiscal councils in the European Union on public fi- nance. Using a fiscal reaction function, the impact of fiscal councils on the discretionary component of fiscal policy is examined. The impact of fiscal councils is a topical issue due to the fact that most EU countries have established fiscal councils in response to the EU legislation adopted after the last financial crisis. The empirical results imply that fiscal councils are complementary to numerical fiscal rules and instrumental for limiting deficit bias in the EU countries, most importantly through monitoring of compliance with fiscal rules and endorsement of macroeconomic and budgetary forecasts. Despite certain research limits, the empirical results point to similar conclusions as from recent papers. Out of the empirical findings, several recommendations can be made for fiscal policy-making.

Keywords: Fiscal councils; fiscal rules; fiscal policy (search for similar items in EconPapers)
JEL-codes: E62 H11 H62 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.18267/j.pep.810

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