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The Disciplining Impact of Local Fiscal Rules in the EU

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  • Beate Jochimsen
  • Christian Raffer

Abstract

Although research highlights the discipline‐enhancing effect of fiscal rules at the national level, little is known about their impact on local budgets. We employ a dynamic fiscal reaction function within an LSDVC framework to explore the relevance of different local fiscal rules in the EU using a panel dataset of 26 European countries over a 26‐year period (1997–2022). Our findings suggest that debt rules and expenditure rules have a positive relation with budget discipline on the local level. Thus, the mere existence of a DR is less relevant compared to its strength. Consequently, rule design should receive greater attention.

Suggested Citation

  • Beate Jochimsen & Christian Raffer, 2026. "The Disciplining Impact of Local Fiscal Rules in the EU," Public Budgeting & Finance, Wiley Blackwell, vol. 46(3), pages 40-56, September.
    • Handle: RePEc:bla:pbudge:v:46:y:2026:i:3:p:40-56
    DOI: 10.1111/pbaf.70012
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