Fiscal Governance and Adjustments Under Crisis Conditions

One uncontroversial conclusion from four years of European debt crisis is the need for a general overhaul of fiscal governance. However, any reforms must be based on a sound understanding of the (fiscal) origins of the current crisis and the impact of various fiscal institutions. This project addresses several key issues in this regard. The first module is devoted to the study of the impact of windfall revenues (related to macro-development and asset booms) and the moral hazard effects of fiscal transfers on budgetary decisions. The second module analyses the growth effects of consolidation, and the third module studies the political effects of consolidation, thereby contributing to the analysis of democratic constraints of consolidation policies. The fourth module, finally, studies the effectiveness of fiscal rules, in particular the political-economic conditions under which fiscal rules effectively constrain budgetary policy. Overall, these modules contribute to the understanding of how to improve the design of fiscal governance institutions in the EU. An overarching methodological objective is to advance the implementation of credible identification techniques.

Duration: April 2014 - September 2015

• Zareh Asatryan, ZEW – Leibniz Centre for European Economic Research, Department of Corporate Taxation and Public Finance
• Dirk Foremny, PhD, University of Barcelona, Institut d’Economia de Barcelona, Spain
• Prof. Albert Solé-Ollé, University of Barcelona, Institut d’Economia de Barcelona, Spain
• Friedrich Heinemann, ZEW – Leibniz Centre for European Economic Research, Department of Corporate Taxation and Public Finance
• Florian Misch, PhD, ZEW – Leibniz Centre for European Economic Research, Department of Corporate Taxation and Public Finance
• Prof. Thomas Stratmann, George Mason University, Fairfax, USA
• Melissa Engel, ZEW – Leibniz Centre for European Economic Research, Department of Corporate Taxation and Public Finance
• Marc-Daniel Moessinger, ZEW – Leibniz Centre for European Economic Research, Department of Corporate Taxation and Public Finance
• Mustafa Yeter, ZEW – Leibniz Centre for European Economic Research, Department of Corporate Taxation and Public Finance