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Are Member States’ Budgetary Policies Adhering to the EU Fiscal Rules?

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  • David Cronin

Abstract

Harmonised data from the 2013 to 2018 Stability and Convergence Programmes (SCPs) are used to assess whether member states are acting to meet EU fiscal requirements and, in particular, their medium-term objectives (MTOs). EU AMECO data are employed to check whether planned fiscal policy, set out in the SCPs, materialises ex-post. The main finding is that planned changes in the fiscal stance aim towards meeting the MTO when that target has not yet been attained but less effort occurs in practice. Member states who have already met their MTO loosen their fiscal stance. The policy message is that, in general, the enhanced, post-crisis EU fiscal framework is delivering budgetary policy that contributes to avoiding excessive deficit and debt positions. The fiscal consolidation actually undertaken, however, is less than planned and the upside of the economic cycle does not see greater effort towards meeting MTOs. Moreover, those member states with prior excessive deficits do not make, nor plan, any additional fiscal effort over other member states also striving to meet their MTO. The policy reaction to the economic cycle is pro-cyclical in nature.

Suggested Citation

  • David Cronin, 2020. "Are Member States’ Budgetary Policies Adhering to the EU Fiscal Rules?," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot GmbH, Berlin, vol. 66(1), pages 47-64.
    • Handle: RePEc:dah:aeqaeq:v66_y2020_i1_q1_p47-64
    DOI: 10.3790/aeq.66.1.47
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    References listed on IDEAS

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    Cited by:

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    2. Cronin, David & McInerney, Niall, 2023. "Official fiscal forecasts in EU member states under the European Semester and Fiscal Compact – An empirical assessment," European Journal of Political Economy, Elsevier, vol. 76(C).

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    More about this item

    Keywords

    EU fiscal rules; policy stance; economic cycle;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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