The impact of supranational fiscal rules on public finance: the case of EMU member states

The global financial and economic crisis of 2007 and 2008 entailed a sharp deterioration of fiscal positions worldwide; however, fiscal rules soon tightened up in different countries, and parallelly, budgetary discipline improved. A reconsideration of the fiscal policy was necessary as a sovereign debt crisis evolved as a result of the world economic crisis in several countries of the European Union and the eurozone. The study starts at the government debt map of the old member states of the European Union, to which the Hungarian financial positions outside the eurozone are compared. Then, the components of the new Hungarian public finance regulation, major measures, which resulted in an improvement in line with eurozone positions, are presented in full detail. Our study seeks to prove that because of the Hungarian public finance reforms, the fiscal course has also improved, fitting the trends of developed member states of the EU. Although earlier researches have highlighted that it was not only modified fiscal policies that contributed to the post-crisis debt consolidation process in the countries of the eurozone but also the combined effect of the real interest rate and real growth policy. The uniqueness of the study lies in the regulatory instruments, with which the country – positioned in a socialist planned economy, then demonstrating a weak fiscal discipline and sunk in a fiscal crisis even before the global economic crisis of 2007 and 2008 – has consolidated its positions.

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Przejrzystość fiskalna a stabilność polskiego systemu finansów publicznych

Kwartalnik Kolegium Ekonomiczno-Społecznego Studia i Prace ◽

10.33119/kkessip.2017.1.2 ◽

2017 ◽

pp. 31-44

Author(s):

Elżbieta Malinowska-Misiąg

Keyword(s):

Public Finance ◽

Fiscal Policy ◽

Significant Error ◽

Fiscal Rules ◽

Fiscal Transparency ◽

Budgetary Institutions ◽

Quality And Reliability ◽

The Impact ◽

Sector Data

The aim of the article is to verify the impact of fiscal transparency on the quality and reliability of public finance sector data which in turn are the basis for formulating conclusions on the effectiveness of fiscal policy and the sustainability of public finance. The article identifies and provides examples of the primary areas that impair fiscal transparency in Poland, particularly: the scope of public finance sector, the extra-budgetary institutions and fiscal rules. In conclusion the author underlines that the findings based on published budgetary data can be subject to a significant error.

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Economic growth and income distribution implications of public spending and tax decisions

Society and Economy ◽

10.1556/204.2020.00025 ◽

2020 ◽

Vol 42 (4) ◽

pp. 351-365

Author(s):

Zsolt Darvas

Keyword(s):

Public Finance ◽

Income Inequality ◽

Low Income ◽

Public Investment ◽

Fiscal Rules ◽

Social Spending ◽

Public Expenditures ◽

Public Infrastructure ◽

The Impact ◽

Distribution Of Income

AbstractBoth the level and composition of public expenditures and revenues have implications for economic development, as argued by the ‘fiscal multiplier’ and the ‘quality of public finance’ literature. Public finance decisions also influence the distribution of income. By reviewing the literature, I argue for a fair distribution of income as reflected in low income inequality, not particularly because of the impact of income inequality on long-term growth (which is a controversial issue), but primarily because income inequality typically implies inequality of opportunity. European Union countries have very diverse public finance structures and different levels of effectiveness, and there is room for improvement in growth and equality impacts in all countries. A general guideline would be that the most effective approach comprises progressive taxes and inheritance taxes, spending on education, health and public infrastructure, and better government effectiveness. At the height of the 2008 global and the subsequent European financial and economic crises, the fiscal consolidation strategies of EU countries largely relied on cutting public investment and social spending (except pensions), which is the opposite of what is suggested in the literature. Better fiscal rules and good fiscal institutions are needed to safeguard growth- and distribution friendly expenditures in a crisis.

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Corruption and Political Order

10.1093/oso/9780198714644.003.0005 ◽

2018 ◽

Author(s):

Hazel Gray

Keyword(s):

Public Finance ◽

Local Level ◽

Economic Transformation ◽

Political Order ◽

Capital Flight ◽

The Political ◽

Political Actors ◽

The Impact ◽

Political Settlement ◽

The Way

This chapter contrasts the way that the political settlement in both countries shaped the pattern of redistribution, reform, and corruption within public finance and the implications that this had for economic transformation. Differences in the impact of corruption on economic transformation can be explained by the way that their political settlements generated distinct patterns of competition and collaboration between economic and political actors. In Vietnam corrupt activities led to investments that were frequently not productive; however, the greater financial discipline imposed by lower-level organizations led to a higher degree of investment overall in Vietnam that supported a more rapid economic transformation under liberalization than in Tanzania. Individuals or small factional networks within the VCP at the local level were, therefore, probably less able to engage in forms of corruption that simply led to capital flight as happened in Tanzania, where local level organizations were significantly weaker.

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What Determines Fiscal Deficits in Europe? The Impact and Interaction of EMU Membership, Fiscal Rules, Fiscal Councils and Creative Accounting

Review of Economics ◽

10.1515/roe-2020-0004 ◽

2020 ◽

Vol 71 (1) ◽

pp. 15-41

Author(s):

Dominik Maltritz ◽

Sebastian Wüste

Keyword(s):

Fiscal Rules ◽

Special Focus ◽

Annual Data ◽

Budget Balance ◽

Fiscal Deficits ◽

Eu Countries ◽

Creative Accounting ◽

Stock Flow ◽

The Impact

AbstractWe search for drivers of fiscal deficits in Europe using a data panel containing annual data of 27 EU countries in the years 1991–2012. Our special focus is on the influence of fiscal rules as well as on fiscal councils, i. e. institutions that may help to reduce deficits and enforce fiscal rules by advising governments. We distinguish between internal fiscal rules and external rules that result from EMU membership. In addition, we consider the impact of “creative accounting”, i. e. measures that help to circumvent fiscal rules, which we approximate by so called stock-flow-adjustments. We especially analyze the interactive influence of the mentioned variables on the budget balance.

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The impact of non-pharmaceutical interventions on COVID-19 epidemic growth in the 37 OECD member states

European Journal of Epidemiology ◽

10.1007/s10654-021-00766-0 ◽

2021 ◽

Author(s):

Francisco Pozo-Martin ◽

Heide Weishaar ◽

Florin Cristea ◽

Johanna Hanefeld ◽

Thurid Bahr ◽

...

Keyword(s):

Growth Rate ◽

Early Phase ◽

Policy Decision ◽

Multilevel Modelling ◽

Daily Growth ◽

Public Places ◽

Member States ◽

Unit Increase ◽

Policy Decision Making ◽

The Impact

AbstractWe estimated the impact of a comprehensive set of non-pharmeceutical interventions on the COVID-19 epidemic growth rate across the 37 member states of the Organisation for Economic Co-operation and Development during the early phase of the COVID-19 pandemic and between October and December 2020. For this task, we conducted a data-driven, longitudinal analysis using a multilevel modelling approach with both maximum likelihood and Bayesian estimation. We found that during the early phase of the epidemic: implementing restrictions on gatherings of more than 100 people, between 11 and 100 people, and 10 people or less was associated with a respective average reduction of 2.58%, 2.78% and 2.81% in the daily growth rate in weekly confirmed cases; requiring closing for some sectors or for all but essential workplaces with an average reduction of 1.51% and 1.78%; requiring closing of some school levels or all school levels with an average reduction of 1.12% or 1.65%; recommending mask wearing with an average reduction of 0.45%, requiring mask wearing country-wide in specific public spaces or in specific geographical areas within the country with an average reduction of 0.44%, requiring mask-wearing country-wide in all public places or all public places where social distancing is not possible with an average reduction of 0.96%; and number of tests per thousand population with an average reduction of 0.02% per unit increase. Between October and December 2020 work closing requirements and testing policy were significant predictors of the epidemic growth rate. These findings provide evidence to support policy decision-making regarding which NPIs to implement to control the spread of the COVID-19 pandemic.

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Dealing fairly with trade imbalances in monetary unions

Politics Philosophy & Economics ◽

10.1177/1470594x21992005 ◽

2021 ◽

Vol 20 (1) ◽

pp. 45-66

Author(s):

Marco Meyer

Keyword(s):

Economic Policy ◽

Monetary Union ◽

Trade Deficit ◽

Current Situation ◽

Institutional Arrangements ◽

Monetary Unions ◽

Member States ◽

Trade Imbalances ◽

Theories Of Justice ◽

The Impact

Politicians around the globe wrangle about how to deal with trade imbalances. In the Eurozone, members running a trade deficit accuse members running a surplus of forcing them into deficit. Yet political philosophers have largely overlooked issues of justice related to trade imbalances. I address three such issues. First, what, if anything, is wrong with trade imbalances? I argue that in monetary unions, trade imbalances can lead to domination between member states. Second, who should bear the burden of rebalancing trade? I argue that surplus and deficit countries should share that burden. The current situation placing the burden squarely on deficit countries is unjust. Third, which institutional arrangements should monetary unions adopt to regulate trade balances? Monetary unions can either reduce trade imbalances within the monetary union, neutralise the impact of trade imbalances on the economic sovereignty of member states, or delegate economic policy affecting trade balances to a legitimate supranational institution. The Eurozone must adopt one of these options to prevent member states from domination. Which option protects members best against domination depends on what makes interference between members arbitrary, an unresolved question in republican theories of justice.

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