Enhanced Fiscal Governance in the European Union: The Fiscal Compact

• Authors: Merike Kukk , Karsten Staehr
• Languages of publication: EN

Abstracts

EN

Several reforms aiming to strengthen budgetary discipline in the European Union have been implemented since the outbreak of the European debt crisis. Arguably the most important one is the Fiscal Compact, which stipulates that each signatory country must enshrine in domestic legislation an upper limit on the structural budget deficit, that is, the deficit after cyclical and other temporary factors have been excluded. This paper analyses the contents of the Fiscal Compact and discusses challenges for its implementation and efficacy. The conclusion is that the Fiscal Compact may be challenging to implement and enforce because the rules are very complex and require complicated calculations that are subject to very large forecasting uncertainty. The Fiscal Compact could, however, lead to a stronger national commitment to fiscal prudence.

Keywords

EN

cyclical adjustment; European Union; Fiscal Compact; fiscal rules

• Publisher: Sciendo
• Journal: Baltic Journal of European Studies
• Year: 2015
• Volume: 5
• Issue: 1
• Pages: 73-92

Dates

online

2015-02-01

Contributors

author

Merike Kukk

• Department of Finance and Economics, Tallinn University of Technology Akadeemia tee 3-478, Tallinn 12618, Estonia

author

Karsten Staehr

• Department of Finance and Economics, Tallinn University of Technology Akadeemia tee 3-486, Tallinn 12618, Estonia

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Identifiers

DOI

10.1515/bjes-2015-0006