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Fiscal Behaviour In The European Union: Rules, Fiscal Decentralization And Government Indebtedness

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Executive Summary

The authors assess the fiscal behaviour in the European Union countries for the period 1990- 2005 via the responsiveness of budget balances to several determinants. The results show that the existence of effective fiscal rules, the degree of public spending decentralization, and the electoral cycle can impinge on the country's fiscal position. Furthermore, the results also support the responsiveness of primary balances to government indebtedness. In this paper they employ panel data analysis to assess the determinants of government's fiscal behaviour for the 27 EU countries for the period between 1990 and 2005.

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