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Fiscal Councils In Eu Member States: Impact On Fiscal Discipline

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  • Martin Gorčák
  • Stanislav Šaroch

Abstract

This paper presents the impact of fiscal councils in the European Union on public fi- nance. Using a fiscal reaction function, the impact of fiscal councils on the discretionary component of fiscal policy is examined. The impact of fiscal councils is a topical issue due to the fact that most EU countries have established fiscal councils in response to the EU legislation adopted after the last financial crisis. The empirical results imply that fiscal councils are complementary to numerical fiscal rules and instrumental for limiting deficit bias in the EU countries, most importantly through monitoring of compliance with fiscal rules and endorsement of macroeconomic and budgetary forecasts. Despite certain research limits, the empirical results point to similar conclusions as from recent papers. Out of the empirical findings, several recommendations can be made for fiscal policy-making.

Suggested Citation

  • Martin Gorčák & Stanislav Šaroch, 2022. "Fiscal Councils In Eu Member States: Impact On Fiscal Discipline," Prague Economic Papers, Prague University of Economics and Business, vol. 2022(5), pages 327-346.
    • Handle: RePEc:prg:jnlpep:v:2022:y:2022:i:5:id:810:p:327-346
    DOI: 10.18267/j.pep.810
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    References listed on IDEAS

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    More about this item

    Keywords

    Fiscal councils; fiscal rules; fiscal policy;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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