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SCIENCE ARTICLE
Fiscal rules management in the EU: differences between fiscally sustainable and unsustainable countries
1
Faculty of Economics, Technical University of Kosice, Slovak Republic
2
Institute of Economics and Finance, Faculty of Legal and Economic Sciences, University of Zielona Gora, Poland
Submission date: 2024-11-13
Final revision date: 2025-01-07
Acceptance date: 2025-01-17
Online publication date: 2025-01-28
Publication date: 2025-02-03
Corresponding author
Joanna Wyrwa
Institute of Economics and Finance, Faculty of Legal and Economic Sciences, University of Zielona Gora, Poland
Institute of Economics and Finance, Faculty of Legal and Economic Sciences, University of Zielona Gora, Poland
Management 2024;28(2):504-528
KEYWORDS
JEL CLASSIFICATION CODES
E61
E62
H62
H63
C33
F45
TOPICS
ABSTRACT
The paper examines fiscal sustainability within the European Union (EU), focusing on its key indicator - the long-term cointegration relationship between government revenues and expenditures. Given the EU's shared monetary framework, understanding fiscal sustainability at both the union level and within individual member states is critical for macroeconomic stability management. First, using a cointegration analysis, the research assesses fiscal sustainability across EU countries from 1995 to 2021. The findings reveal significant disparities, seeing that 14 member states show a strong cointegration relationship, indicating their fiscal sustainability, while 13 exhibit weaker evidence, highlighting ongoing challenges to proceed fiscally sustainable environment. Second, the study evaluates the impact of fiscal rules on budgetary outcomes using panel data models. Results suggest that fiscal rules enhance fiscal discipline across the EU, with more pronounced effect in countries facing sustainability challenges. Further, in more fiscally stable economies, broader macroeconomic factors such as economic performance and income levels are found to play more important role in budget balance changes. The paper contributes to the broader debate on the effectiveness of fiscal rules and the future of fiscal governance in the EU, offering insights to strengthen long-term fiscal stability across member states.
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| ISSN: | 1429-9321 (1997-2019) |
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