EU Independent Fiscal Institutions: An Assessment of Potential Effectiveness

Abstract

The article explores if EU independent fiscal institutions (IFIs) are in a position to exercise effective scrutiny of national fiscal policies. It identifies substantial heterogeneity across IFIs in resources which is not matched by a similar diversity in mandates. In addition to financial and human resources, better access to information, effective comply‐or‐explain mechanisms and closer links with legislatures could enhance fiscal surveillance and accountability in the EU. The paper provides rankings of individual IFIs constructed based on measures that aggregate these pre‐conditions for effective fiscal scrutiny.

Supranational agency and indirect governance after the Euro crisis: ESM, ECB, EMEF and EFB

“…By providing impartial fiscal assessments of the 'true' fiscal stance of a government to parliamentarians, voters, the media and other intermediaries such as credit rating agencies, a fiscal council can indirectly orchestrate fiscal discipline and, thereby, improve the compliance with the fiscal rules (Beetsma and Debrun 2017). In some euro area countries, national fiscal councils already function as reputable watchdogs with a heightened public profile that can increase the political costs for governments pursuing fiscally profligate policies (Horvath 2018).…”

The Troika Is Dead, Long Live the Domestic Troikas??: Varieties of Technocracy and the Diffusion of National Fiscal Councils in the European Union: Agents, Trustees or Orchestrators of Fiscal Discipline?

“…The conceptual models developed by the troika institutions were heterogeneous and provided enough wiggle room for member states to make their fiscal councils compatible with their own domestic institutions. The empirical evidence shows that the orchestration and the agent model make up the entire population of EU fiscal councils, whereas no member state has allowed a trustee fiscal council to conduct fiscal policy independently (Horvath 2018;Larch and Braendle 2018). IOs employed tailor-made indices to persuade others of the superiority of their preferred conceptual model.…”

“…Fiscally hawkish Germany has set up a fiscal council that leaves too much space for political meddling and lacks the financial resources to build up sufficient analytical capacity (Kopits 2013;Fromage 2017). In contrast, the repeated SGP-violator Portugal has exceeded the minimum legislative requirements and created an effective vanguard fiscal council (von Trapp, Lienert, and Wehner 2016;Horvath 2018). This article contends that by focusing on the influence of different international organisations (IOs) in the diffusion of fiscal councils this puzzle can be solved.…”

On the Legitimacy of Fiscal Councils in the European Union: Trustees or Orchestrators of Fiscal Discipline?

“…the degree of local ownership). In many European countries orchestrating fiscal councils have become highly reputable bodies which makes it harder for parties to ignore their recommendations (Horvath 2018).…”