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Do Fiscal Constraints Actually Work in the EU?

Author

Listed:
  • Florin-Alexandru Macsim

    (”Alexandru Ioan Cuza” University of Iasi)

  • Florin Oprea

    („Alexandru Ioan Cuza” University of Iasi)

Abstract

In the current troubled times for the European economies, the role of numerical fiscal rules as fiscal constraints gets more and more attention, both in scientific research and in public debate. In this regard, it was our objective to analyze the impact of the balance budget rule and its coverage degree on public debt and deficit levels in EU countries. Through our conducted analyses we observed that although a stronger rule conducts to an increase in government’s debt levels, a higher degree of coverage of the rule conducts to a strong reduction in debt levels. On the other hand, a stronger rule has a positive impact on deficit levels, although a higher degree of coverage has a strong negative impact. Considering our main findings, we submit to the general point of view that constructing and imposing numerical rules as fiscal constraints is one of the most difficult tasks of policy-makers these days.

Suggested Citation

  • Florin-Alexandru Macsim & Florin Oprea, 2015. "Do Fiscal Constraints Actually Work in the EU?," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 458-463, May.
    • Handle: RePEc:ovi:oviste:v:xv:y:2015:i:2:p:458-463
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    More about this item

    Keywords

    fiscal rules; public debt; public deficits; institutions;
    All these keywords.

    JEL classification:

    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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