The Divergence between the EU and non-EU Fiscal Councils
The Divergence between the EU and non-EU Fiscal Councils

Author(s): András Bethlendi, Csaba Lentner, András Póra
Subject(s): Economic policy, EU-Accession / EU-DEvelopment, Fiscal Politics / Budgeting
Published by: Masarykova univerzita nakladatelství
Keywords: rules-based fiscal policy; fiscal council; independent fiscal institutions; fiscal prudency;
Summary/Abstract: The European sovereign crisis that followed the 2008 crisis showed that rulesbased fiscal policy is insufficient in itself in order to avoid fiscal alcoholism and excessive sovereign debt. Nevertheless, these policies have become more and more widespread in order to limit indebtedness. This article deals with one of the most important elements of rules-based systems: the fiscal council. The key question imposed was: is it mostly a European phenomenon, or rather a global standard? Is there a divergence between the EU and non-EU fiscal councils, or not? As a method, we employed descriptive statistics, then a hierarchical cluster analysis, based on the data of the IMF Fiscal Council Dataset. In conclusion, an EU and a non-EU cluster were formed, thus our working hypothesis was mostly underpinned. Our results have thus contributed to the literature and advanced the case that the increased number of fiscal councils can be attributed to European regulations or internal political issues rather than strengthening of fiscal prudency.

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