"Budgeting in Europe: Did the domestic budget process change after Maastricht?"

Hallerberg, Mark. (2003) "Budgeting in Europe: Did the domestic budget process change after Maastricht?". In: UNSPECIFIED, Nashville, TN. (Unpublished)

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Abstract

This paper is part of a broader project that considers whether Maastricht changed the way that European Union member states make budgets. It has four parts. 1) It first examines the development of domestic fiscal rules the past decade ... I find that some parts of the budget process have been strengthened in all countries. In aggregate, however, the amount of change is not the same. While some countries like Belgium initiated significant reforms, others like Germany and Portugal did not make similar improvements. 2) In order to understand the development of the budget rules, a theoretical framework of budgeting in parliamentary democracies is necessary ... Centralization of the budget process reduces the problem, and in practice there are two ways to achieve this centralization. One involves delegation to a finance minister. The second solution involves detailed fiscal rules in the form of a commitment to a fiscal contract. 3) Once this theoretical framework is in place, one can evaluate whether European Union states made changes to their budget systems consistent with either delegation or commitment. I find that countries that adopt fiscal rules most consistent with a country's expected form of fiscal governance have better fiscal performance than countries that do not. 4) I conclude with a consideration of how Maastricht does, or does not, reinforce budget discipline in European Union Countries.

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