Tied to the Mast? National Fiscal Rules in the European Union

65 Pages Posted: 19 Mar 2008

See all articles by Xavier Debrun

Xavier Debrun

International Monetary Fund (IMF) - Research Department

Laurent Moulin

European Union - Directorate General for Economic and Financial Affairs (DG ECFIN)

Alessandro Turrini

European Commission; Centre for Economic Policy Research (CEPR)

Joaquim Ayuso-i-Casals

European Union - European Commission

Manmohan Kumar

International Monetary Fund (IMF) - Research Department

Abstract

Numerical fiscal rules implemented at the national level in member countries of the European Union offer useful information on possible reasons for the growing reliance on such rules, and on their implication for fiscal policy. Our analysis of a survey-based dataset suggests that both the introduction of the EU fiscal framework and country-specific fiscal governance features played a role in triggering introduction of numerical fiscal rules, and that the impact of rules is statistically significant, robust, and quantitatively important. Outcomes and rules may be jointly determined by unobserved political factors, but the evidence suggests that causality runs from rules to fiscal behavior, and that rules specifically designed to prevent conflicts with the stabilization function of fiscal policy are indeed associated with less pro-cyclical policies.

Suggested Citation

Debrun, Xavier and Moulin, Laurent and Turrini, Alessandro and Ayuso-i-Casals, Joaquim and Kumar, Manmohan, Tied to the Mast? National Fiscal Rules in the European Union. Economic Policy, Vol. 23, Issue 54, pp. 297-362, April 2008, Available at SSRN: https://ssrn.com/abstract=1108480 or http://dx.doi.org/10.1111/j.1468-0327.2008.00199.x

Xavier Debrun (Contact Author)

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-8321 (Phone)
202-623-6343 (Fax)

Laurent Moulin

European Union - Directorate General for Economic and Financial Affairs (DG ECFIN) ( email )

BU-1 05/190
Brussels, Bruxelles B-1049
Belgium

Alessandro Turrini

European Commission ( email )

Office BU-10/113
B-1049 Brussels
Belgium
+32 2 299 5072 (Phone)
+32 2 299 3505 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Joaquim Ayuso-i-Casals

European Union - European Commission

Rue de la Loi 200
Brussels, B-1049
Belgium

Manmohan Kumar

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-7771 (Phone)
202-589-7771 (Fax)

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