Independent Fiscal Councils: Neglected Siblings of Independent Central Banks? An EU Perspective

Larch, Martin; Braendle, Thomas

doi:10.1111/jcms.12577

Cited by 23 publications

(24 citation statements)

References 45 publications

(39 reference statements)

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“…4 The present paper also relates to the literature describing the emergence of IFCs and their design features. Larch (2016) studies the delegation of fiscal stabilization to IFCs, while Horvath (2016) investigates how IFCs can be designed to effectively scrutinize national fiscal policies. Formal empirical work on the effectiveness of IFCs is rare, reflecting limited experience in most countries.…”

Section: ©International Monetary Fund Not For Redistributionmentioning

confidence: 99%

The Political Economy of Fiscal Transparency and Independent Fiscal Councils

Beetsma

Debrun²,

Sloof³

2017

IMF Working Papers

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The global surge in independent fiscal councils (IFCs) raises three related questions: How can IFCs improve the conduct of fiscal policy? Are they simultaneously desirable for voters and elected policymakers? And are they resilient to changes in political conditions? We build a model in which voters cannot observe the true competence of elected policymakers. IFCs' role is to mitigate this imperfection. Equilibrium public debt is excessive because policymakers are "partisan" and "opportunistic." If voters only care about policymakers' competence, both the incumbent and the voters would be better off with an IFC as the debt bias would shrink. However, when other considerations eclipse competence and give the incumbent a strong electoral advantage or disadvantage, setting up an IFC may be counterproductive as the debt bias would increase. If the incumbent holds a moderate electoral advantage or disadvantage, voters would prefer an IFC, but an incumbent with a large advantage may prefer not to have an IFC. The main policy implications are that (i) establishing an IFC can only lower the debt bias if voters care sufficiently about policymakers' competence; (ii) not all political environments are conducive to the emergence of IFCs; and (iii) IFCs are consequently vulnerable to shifts in political conditions.

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Section: ©International Monetary Fund Not For Redistributionmentioning

confidence: 99%

The Political Economy of Fiscal Transparency and Independent Fiscal Councils

Beetsma

Debrun²,

Sloof³

2017

IMF Working Papers

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“…When compared to the diffusion of central bank independence, it becomes clear that ‘institutional isomorphism' – such as the spread of a uniform institutional design across different settings of social interaction (McNamara, , p. 62) – is rather exceptional as it requires all actors to converge around a single conceptual model and then collectively enforce its implementation. At the current juncture, fiscal councils resemble ‘neglected siblings of independent central banks' (Larch and Braendle, ) but definitely not twins, given their institutional heterogeneity. However, convergence towards a more homogeneous fiscal council model might ensue after an initial stage of institutional experimentation.…”

Section: Resultsmentioning

confidence: 99%

‘The Troika is Dead, Long Live the Domestic Troikas?': The Diffusion of National Fiscal Councils in the European Union

Tesche

2019

J of Common Market Studies

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This article shows that the troika institutions – the European Commission, the European Central Bank and the International Monetary Fund – formed a technocratic consensus about the desirability of establishing national fiscal councils in the European Union (EU). Considerable disagreement existed, however, with regard to their design features. Each institution promoted a distinct mode of indirect governance by ranking national fiscal councils depending on their adopted governance model (agent, trustee or orchestrator). This persuasion, through entrepreneurial benchmarking, constitutes an important mechanism by which member states were nudged to adopt a distinct fiscal council model. Preference heterogeneity among the troika members ultimately prevented the spread of a one‐size‐fits‐all fiscal council in the EU.

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“…Larch (2016) makes the interesting suggestion of separating the stabilisation function of fiscal policy from its distributive and allocative ones. Plainly, the macroeconomic dimension of fiscal policy cannot be wholly divorced from its distributive role, but very different mixes of allocative and distributive outcomes are conceivable within the same stabilisation parameters.…”

Section: Discussionmentioning

confidence: 99%

Fiscal and Other Rules in EU Economic Governance: Helpful, Largely Irrelevant or Unenforceable?

Begg

2017

Natl. Inst. econ. rev.

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Abstract:EU Member States, particularly in the euro area, have been pushed to adopt more extensive and intrusive fiscal rules, but,what is the evidence that the rules are succeeding?. The EU level Stability and Growth Pact (SGP) has been -and remains -the most visible rule-book, but it has been complemented by a profusion of national rules and by new provisions on other sources of macroeconomic imbalance. Much of the analysis of rules has concentrated on their technical merits, but tends to neglect the political economy of compliance. This paper examines the latter looking at compliance with fiscal rules at EU and Member State levels, and at the rules-based mechanisms for curbing other macroeconomic imbalances. It concludes that politically driven implementation and enforcement shortcomings have been given too little attention, putting at risk the integrity and effectiveness of the rules.

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Independent Fiscal Councils: Neglected Siblings of Independent Central Banks? An EU Perspective

Cited by 23 publications

References 45 publications

The Political Economy of Fiscal Transparency and Independent Fiscal Councils

The Political Economy of Fiscal Transparency and Independent Fiscal Councils

‘The Troika is Dead, Long Live the Domestic Troikas?': The Diffusion of National Fiscal Councils in the European Union

Fiscal and Other Rules in EU Economic Governance: Helpful, Largely Irrelevant or Unenforceable?

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