How the Fiscal Council Rules Influence the Fiscal Stability

Hussein MKIYES

https://doi.org/10.53465/EDAMBA.2023.9788022551274.164-174

 

Abstract: Fiscal councils were established in many European Union countries to promote fiscal discipline and stability. However, fiscal instability persists in the EU. This study analyses the role of fiscal councils in achieving fiscal stability in the EU from 2011-2021 using panel data and the LSDV model. The results indicate a strong causal relationship between fiscal councils and improved fiscal performance. Fiscal councils with legal independence, adequate staffing, budget protections, and fiscal rule monitoring authority demonstrated the greatest impact. However, the effectiveness of fiscal councils may be limited by their recent establishment. While fiscal councils enhance fiscal stability prospects, external crises like COVID-19 can still undermine fiscal policy. The study contributes to understanding fiscal councils' evolving role in the EU. It uses a broad sample of EU members over an extended period. Further research could examine councils' performance across different country-specific contexts. Overall, well-designed fiscal councils are beneficial but not sufficient for enduring fiscal stability. Complementary institutions and policy adjustments may be needed, especially during crises.

Key words: Fiscal Councils, Economic Stability, Fiscal Policy, Fiscal Stability, Public Debt

JEL classification: B22, E6, H61

Fulltext: PDF

Online publication date: 25 January 2024

ISBN: 978-80-225-5127-4

Publisher: University of Economics in Bratislava

Pages: 164-174

 

To cite this proceedings paper (STN ISO 690 and 690-2): 

MKIYES, H. 2024. How the Fiscal Council Rules Influence the Fiscal Stability. In PETROVSKÁ, F. (ed.). EDAMBA 2023: Conference Proceedings. Bratislava: University of Economics in Bratislava, 2024. ISBN 978-80-225-5127-4, pp. 164-174.

https://doi.org/10.53465/EDAMBA.2023.9788022551274.164-174