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Is EU Fiscal Governance Effective? A Case Study for the Period 1999–2019

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  • Panagiotis Liargovas

    (Department of Management Science and Technology, University of Peloponnese, Erythrou Stavrou 28 & Karyotaki, 22131 Tripoli, Greece
    Centre of Planning and Economic Research (KEPE), Amerikis 11 Str., 10672 Athens, Greece)

  • Vasilis Pilichos

    (Department of Economics, University of Peloponnese, Tripoli Campus, 22100 Tripoli, Greece)

Abstract

This paper examines the factors that influence the effectiveness of fiscal governance in the EU through a panel of 19 Eurozone countries for the period 1999–2019 using an OLS method. The results show the positive effects of economic growth, inflation and the change in the general government balance on the fiscal forecast error. Furthermore, the fiscal forecast error is negatively affected by the level of public debt and by elections. Fiscal transparency is integrated into the analysis through independent financial institutions, which positively influence the general government balance forecast error. Finally, Economic Adjustment Programs have a positive effect on the fiscal forecast error, thus improving the efficiency of fiscal governance. This paper suggests that independent budgetary institutions, such as fiscal councils, and the delegation of further responsibilities to them increase countries’ sustainability of public finances.

Suggested Citation

  • Panagiotis Liargovas & Vasilis Pilichos, 2022. "Is EU Fiscal Governance Effective? A Case Study for the Period 1999–2019," Economies, MDPI, vol. 10(8), pages 1-17, July.
    • Handle: RePEc:gam:jecomi:v:10:y:2022:i:8:p:187-:d:876223
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    References listed on IDEAS

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