The Political Economy of Fiscal Councils and Fiscal Rules: Towards Decentralized Fiscal Governance in the EMU?

Abstract

With the European debt crisis, fiscal governance in the EMU was considerably strengthened, demanding Member States to introduce domestic fiscal councils and rules beyond the common supranational requirements. Regarding fiscal councils, their number in the euro area has sharply increased after the fiscal compact and six and two-pack regulations (Beetsma and Debrun 2016; Beetsma and Debrun 2017). The number of national fiscal rules equally grew strongly over the last years. The legislative requirements were, however, intentionally left ambiguous to give member states the necessary leeway to reconcile the new institutions with local idiosyncrasies. As a result, fiscal councils in the EU have very heterogenous mandates (Horvath 2018b) and national fiscal rules vary strongly in their stringency across member states. Fiscal councils differ with respect to their level of domestic ownership, independence, reputation, expertise, access to information and available resources (Tesche 2019b, Horvath 2018a). Implemented fiscal rules possess very different degrees of discretion constraint due to country-specific public deficit/debt limits and different surveillance and enforcement mechanisms. The empirics of fiscal councils and fiscal rules thus offer a promising field for political economists to understand the evolution of fiscal governance in EMU and the recent trend towards the decentralization of the European and national fiscal frameworks. Potential research questions include: - Which factors determine the effectiveness of fiscal councils and fiscal rules? - Are fiscal councils legitimate bodies or just another technocratic expert body that will lead to more austerity and further reduce the room of maneuver for elected politicians? - Which role do supranational and national fiscal rules play in fiscal policy-making? - Have fiscal councils improved the compliance with fiscal rules? - How have national fiscal councils and rules changed the fiscal relationships between different levels of government? - How does the interaction between fiscal councils, the European Commission and the European Fiscal Board work? - Do domestic actors make strategic use of fiscal council opinions and fiscal rule limits to advance their own agendas? - What are potential network/coordination effects between different national fiscal councils? - In which direction are current reform proposals of fiscal governance in the EMU heading and which role to national fiscal councils and fiscal rules play in them? Given these issues at stake, this panel thus encourages paper proposals that engage with: 1) Case studies of national fiscal councils and fiscal rules and their interaction with the EU fiscal framework 2) Empirically guided analyses of the ‘Six-Pack’, ‘Two-Pack’ and Fiscal Compact and the consequences for EU fiscal governance 3) Empirically guided analysis of various fiscal rule frameworks and how they have worked in practice (i.e. have Member States complied with them? How can they be improved?) 4) The evolution of the Stability and Growth Pact (Have recent developments strengthened or weakened the Pact? How can the SGP be simplified?) and the European Semester

Title	Details
The Four Fiscal Worlds. How the EU Countries Balanced Income Equality and Economic Growth After the Euro Crisis.	View Paper Details
The Ambiguous Consensus on Fiscal Rules in the Eurozone	View Paper Details
To Tie Each Other Hands: Explaining the Preferences of Member States to Increase the National Ownership of European Fiscal Rules in the Period 2010-2013	View Paper Details
Varieties of Fiscal Councils in the Euro Area: How Have Domestic Political Economy Considerations Influenced Their Design?	View Paper Details
Fiscal Trade-Offs: Deficits, Austerity and the Macroeconomic Beliefs of Voters	View Paper Details