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The Expenditure Benchmark: Complex and Unsuitable for Independent Fiscal Institutions

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  • Carlos Fonseca Marinheiro

    (Portuguese Public Finance Council (Conselho das Finanças Públicas)
    University of Coimbra)

Abstract

The expenditure benchmark is an indicator for the evolution of public expenditure introduced in 2011 in the already complex European fiscal rules framework, being a very specific application of an expenditure rule. However, it is a quite complex indicator and not suitable for the use at national level by the Independent Fiscal Institutions—that monitor compliance with national fiscal rules—as it relies on the European Commission’s data inputs and judgement not available in real time. This paper argues for more transparency and for a simplification of this indicator to reduce the reliance on non-observable variables. Such improvements are essential as most existing proposals to reform the European Union’s fiscal rules aim to use an expenditure rule as the operational fiscal rule, a role the expenditure benchmark as is cannot fulfil.

Suggested Citation

  • Carlos Fonseca Marinheiro, 2021. "The Expenditure Benchmark: Complex and Unsuitable for Independent Fiscal Institutions," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 63(3), pages 411-431, September.
    • Handle: RePEc:pal:compes:v:63:y:2021:i:3:d:10.1057_s41294-021-00151-6
    DOI: 10.1057/s41294-021-00151-6
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    Cited by:

    1. Julia del Amo Valor & Marcos Martín Mateos & Diego Martínez López & Javier J. Pérez, 2023. "Is the European economic governance framework too “complex”? A critical discussion," Working Papers 2023-06, FEDEA.
    2. Cronin, David & McQuinn, Kieran, 2023. "Government debt forecast errors and the net expenditure rule in EU countries: Undue optimism at a cost," Journal of Policy Modeling, Elsevier, vol. 45(6), pages 1113-1131.
    3. Cronin, David & McGowan, Kieran, 2023. "Government debt forecast errors and the net expenditure rule in EU countries," Papers WP756, Economic and Social Research Institute (ESRI).
    4. Mario Alloza & Javier Andrés & Pablo Burriel & Iván Kataryniuk & Javier J. Pérez & Juan Luis Vega, 2021. "La reforma del marco de gobernanza de la política fiscal de la Unión Europea en un nuevo entorno macroeconómico," Occasional Papers 2121, Banco de España.
    5. Alessandra Cepparulo & Giuseppe Eusepi & Luisa Giuriato, 2024. "Public Finance, Fiscal Rules and Public–Private Partnerships: Lessons for Post-COVID-19 Investment Plans," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 66(1), pages 191-213, March.
    6. Benalal, Nicholai & Freier, Maximilian & Melyn, Wim & Van Parys, Stefan & Reiss, Lukas, 2022. "Towards a single fiscal performance indicator," Occasional Paper Series 288, European Central Bank.
    7. João Afonso Coelho, António Portugal Duarte, 2023. "The European fiscal framework: Counterfactual Analysis to its compliance in the hypothetical scenario without the Covid-19 pandemic," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 20(2), pages 265-298, December.
    8. Mario Alloza & Javier Andrés & Pablo Burriel & Iván Kataryniuk & Javier J. Pérez & Juan Luis Vega, 2021. "The reform of the european Union’s fiscal governance Framework in a new Macroeconomic environment," Occasional Papers 2121, Banco de España.
    9. Căpraru, Bogdan & Georgescu, George & Sprincean, Nicu, 2022. "Do independent fiscal institutions cause better fiscal outcomes in the European Union?," Economic Systems, Elsevier, vol. 46(2).
    10. European Fiscal Board (EFB), 2023. "2023 annual report of the European Fiscal Board," Annual reports 2023, European Fiscal Board.

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