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Strategic Signals and Multilateral Fiscal Surveillance

Steclebout-Orseau, Eloise, and Hallerberg, Mark. (2007) Strategic Signals and Multilateral Fiscal Surveillance. In: UNSPECIFIED, Montreal, Canada. (Unpublished)

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    We present a game that first models the relationship among a population, a government and a watchdog. The focus is on the incentives that the government faces when making fiscal policy decisions. The population has incomplete information about the type of government that is in office, but an independent watchdog can reveal whether it is competent or affected by a deficit bias. In the second part of the paper, we elaborate on the strategic changes in fiscal policy-making induced by the introduction of fiscal surveillance at the European level. Based on recent developments, we discuss whether multilateral surveillance is effective as a safeguard against fiscal indiscipline. We find that, if the watchdog acts strategically and internalizes the impact of its signals on the intergovernmental game, it will only provide information on the economic and budgetary state of Member States in specific cases – namely when the cost of sanctions is sufficiently high compared to electoral stakes and provided that few countries are mentioned.

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    Item Type: Conference or Workshop Item (UNSPECIFIED)
    Uncontrolled Keywords: Stability and Growth Pact; budgetary surveillance.
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > economic and financial affairs > fiscal policy
    EU policies and themes > Policies & related activities > budgets & financing
    EU policies and themes > Policies & related activities > economic and financial affairs > Stability and Growth Pact
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Conference: European Union Studies Association (EUSA) > Biennial Conference > 2007 (10th), May 17-19, 2007
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 30 Jun 2008
    Page Range: p. 25
    Last Modified: 15 Feb 2011 17:51

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