Fiscal Responsibility Laws in EU Member States and Their Influence on the Stability of Public Finance

Abstract

This paper assesses the effectiveness of fiscal responsibility laws (FRL) in stabilizing public finance in the member states of the European Union (EU).1 The coordination mechanism of EU fiscal policy is the use and application of established rules for conducting responsible fiscal policy using appropriate instruments of FRL to maintain fiscal discipline, foster economic and macroeconomic growth, and ensure the stability of public finance. The implementation of FRL requires the application of instruments such as budget procedures, numerical fiscal rules, and the existence of independent fiscal institutions. Such instruments differ among the EU member states in terms of institutional models, tasks and competences, quality, and effectiveness. The paper discusses the theoretical implications of FRL and fiscal governance; examines the coordination mechanism of fiscal policy in the EU; assesses the effectiveness of European and national FRL; and concludes that FRL in the EU is diversified because of differences in the instruments used.