European Fiscal Compact in Action: Can Independent Fiscal Institutions Deliver Effective Oversight?

The paper explores if EU independent fiscal institutions (IFIs) are in a position to exercise effective scrutiny over national fiscal policies. It identifies substantial heterogeneity across IFIs in resources which is not matched by a similar diversity in mandates, and highlights the role of local ownership as a potentially important factor in explaining this. In addition to financial and human resources, better access to information, effective comply-or-explain mechanisms and closer links with legislatures could enhance fiscal scrutiny and accountability in the EU. The paper provides rankings of individual IFIs constructed based on measures that quantitatively aggregate these pre-conditions for effective fiscal scrutiny.


Keywords: Fiscal Compact, European Union, fiscal councils, fiscal policy, democracy

JEL classification: E62, F45, H61, H77