Published on February 9, 2021 – Updated on February 9, 2021

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What role for fiscal rules in the EU former communist countries?


This paper shows that, contrary to their favourable effect in the EU non-FCC (Former Communist Countries), fiscal rules are found not to significantly affect fiscal performance in the group of EU FCC. This finding is robust when considering various estimation methods, dividing fiscal rules along various dimensions, and using several observed and computed measures of fiscal performance. In addition, an improvement of the strength of fiscal rules is found to significantly affect fiscal performance in EU FCC, with a magnitude higher than that in EU non-FCC. These findings are particularly important from the perspective of the future Euro zone and EU enlargements.

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