National fiscal frameworks in the post-crisis European Union
Research background: The latest economic and financial crisis has seriously injured European Union Member States, affecting the condition of their public finances. In the face of the crisis, the EU made a special effort to increase the effectiveness of national fiscal frameworks, e.g. by improving the compliance with legislation. The post 2009 reforms were aimed at providing a solid economic foundation for the national fiscal frameworks, especially in the high-debt euro area countries.
Purpose of the article: The goal of this research is twofold. Firstly, it aims to provide an outline of the national fiscal governance in the EU. Secondly, the paper analyzes the changes in the core measures of fiscal governance in the EU between the crisis period and the year 2016 (due to the latest available data) and investigates the similarities in the progress made by the 28 EU countries in restoring balance in public finance.
Methods: To achieve the goal, the literature review and the analysis of core elements of national fiscal frameworks are provided. In the empirical section the grouping method for all 28 EU countries based on the Ward's agglomerative hierarchical clustering method is employed. The study uses data derived from the AMECO database (in the case of fiscal data) and the European Commission thematic data for quality indexes of particular elements of fiscal governance (numerical fiscal rules, medium-term budgetary frameworks and independent fiscal institutions).
Findings & Value added: This paper contributes to the literature by, on the one hand, attempting to analyze changes in main fiscal governance measures and, on the other hand, by assessing their link with public finance through employment of the agglomerative clustering method. Based on the results, the conclusion about the importance of the improvement in fiscal frameworks is provided. The analysis shows that countries with better national fiscal framework achieved better results in public finances regardless the macroeconomic conditions.
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