Effectiveness of fiscal performance in the EU: Contributions of Propensity Score Matching
Kea Baret  1@  
1 : University of Strasbourg, University of Lorraine, CNRS, BETA
University of Lorraine, France, CNRS : UMR7522, BETA, University of Strasbourg, Bureau d'Economie Théorique et Appliquée (BETA)

The financial crisis of 2008-2009 followed by the sovereign debt crisis has heightened the focus on public expenditures and on fiscal rules. The European Union and even more the Economic and Monetary Union, as a singular economic and political space, raise the issues related to the coordination of economic policies and sovereign debt. We propose to evaluate the effect of the national numerical fiscal rules on fiscal performance in the European Union between 2000 and 2013. The cyclically adjusted primary balance is only one tool to measure fiscal discipline. We therefore propose an unprecedented index to mesure the Global Fiscal Performance to capt others elements describing the situation of public finances. We take into account the presence of member countries of the Eurozone. We use the Propensity Score Matching approach which was recently used in Macroeconomic analysis, in particular by Lin and Ye (2007, 2009), Tapsoba (2012), Minea and Tapsoba (2014) and Guerguil et al. (2017). Our main results show that the national numerical fiscal rules adopted in the European Union make it possible to improve fiscal discipline and more largely fiscal performance. We found that depending on you take care the Global Fiscal Performance or only the structural primary budget balance, it is not the same rules that can have a positive effect. But fiscal performance is therefore more effective in countries that have adopted national numerical fiscal rules. The results also show that the Stability Pact is a sufficient rule and does not encourage countries to adopt duplicate or supplementary rules. It can also improve the effect of national rules on the Global Fiscal Performance. Finally, the effect of national numerical fiscal rules in the European Union depends on many structural factors including the strength of these rules.


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