Prague Economic Papers 2022, 31(5):327-346 | DOI: 10.18267/j.pep.810

FISCAL COUNCILS IN EU MEMBER STATES: IMPACT ON FISCAL DISCIPLINE

Martin Gorčák ORCID...a, Stanislav Šaroch ORCID...a
a Faculty of International Relations, Prague University of Economics and Business, Prague, Czech Republic

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.

Keywords: Fiscal councils, fiscal rules, fiscal policy
JEL classification: E62, H11, H62

Received: December 1, 2021; Revised: May 31, 2022; Accepted: July 15, 2022; Published: December 5, 2022  Show citation

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Gorčák, M., & Šaroch, S. (2022). FISCAL COUNCILS IN EU MEMBER STATES: IMPACT ON FISCAL DISCIPLINE. Prague Economic Papers, 31(5), 327-346. doi: 10.18267/j.pep.810
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