<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>This paper examines the impact of budgetary institutions on public finances in the European Union on the basis of a critical survey of the relevant theoretical and empirical literature. In general, the authors find that fiscal institutions (namely fiscal rules) have successfully contributed to greater fiscal sustainability, reduced procyclicality of fiscal policies within the EU, and increased national ownership of fiscal rules by strengthening national fiscal frameworks. A fiscal reaction function was one of the widely used methods to determine the principal variables affecting fiscal outcomes. Some authors used cyclically-adjusted fiscal outcomes as the dependent variable representing the discretionary fiscal policy-making whereas others put emphasis on other fiscal outcomes. The samples of countries covered mostly the EU Member States, representing rather homogenous samples in the context of common EU fiscal framework. Institutional aspects used as independent variables differed significantly among authors and some could be added for future research. Based on the literature survey, several recommendations were made for fiscal policy-making.</p>
</abstract>

This paper examines the impact of budgetary institutions on public finances in the European Union on the basis of a critical survey of the relevant theoretical and empirical literature. In general, the authors find that fiscal institutions (namely fiscal rules) have successfully contributed to greater fiscal sustainability, reduced procyclicality of fiscal policies within the EU, and increased national ownership of fiscal rules by strengthening national fiscal frameworks. A fiscal reaction function was one of the widely used methods to determine the principal variables affecting fiscal outcomes. Some authors used cyclically-adjusted fiscal outcomes as the dependent variable representing the discretionary fiscal policy-making whereas others put emphasis on other fiscal outcomes. The samples of countries covered mostly the EU Member States, representing rather homogenous samples in the context of common EU fiscal framework. Institutional aspects used as independent variables differed significantly among authors and some could be added for future research. Based on the literature survey, several recommendations were made for fiscal policy-making.

Impact of fiscal institutions on public finances in the European Union: Review of evidence in the empirical literature

Prague University of Economics and Business

Review of Economic Perspectives

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

This paper examines the impact of budgetary institutions on public finances in the European Union on the basis of a critical survey of the relevant theoretical...

Impact of fiscal institutions on public finances in the European Union: Review of evidence in the empirical literature

Published Online: Jun 22, 2021

Page range: 215 - 232

Received: Oct 06, 2020

Accepted: Apr 19, 2021

DOI: https://doi.org/10.2478/revecp-2021-0010

Keywords
Deficit Bias, European Fiscal Framework, Fiscal Governance, Fiscal Institutions, Fiscal Outcomes, Fiscal Rules, Stability and Growth Pact

© 2021 Martin Gorčák et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Impact of fiscal institutions on public finances in the European Union: Review of evidence in the empirical literature

Published Online: Jun 22, 2021

Page range: 215 - 232

Received: Oct 06, 2020

Accepted: Apr 19, 2021

DOI: https://doi.org/10.2478/revecp-2021-0010

KeywordsDeficit Bias, European Fiscal Framework, Fiscal Governance, Fiscal Institutions, Fiscal Outcomes, Fiscal Rules, Stability and Growth Pact

© 2021 Martin Gorčák et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
Deficit Bias, European Fiscal Framework, Fiscal Governance, Fiscal Institutions, Fiscal Outcomes, Fiscal Rules, Stability and Growth Pact