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Interpreting Fiscal Accounting Rules in the European Union

Gandrud, C. and Hallerberg, M. (2017). Interpreting Fiscal Accounting Rules in the European Union. Journal of European Public Policy, 24(6), pp. 832-851. doi: 10.1080/13501763.2017.1300182

Abstract

In the European Union, the creation of public debt statistics starts with member state governments’ reports. The EU’s statistical agency–Eurostat–then revises. How do these actors’ incentives shape reported numbers? Governments have incentives to take a more favourable view of often ambiguous accounting rules than Eurostat. Lower debt improves governments’ performance with domestic and external audiences. Eurostat is tasked with monitoring budgets for ‘excessive’ debts. We expect governments to present debt figures that Eurostat then revises upwards. This is more likely when governments have high debts, especially when in the eurozone, and prior to elections. Financial crises heighten the number of policies needing interpretation and both actors have more incentives to shape the numbers. We examine these propositions using Eurostat’s debt revisions. We find debts are revised upwards more for eurozone countries with higher debt levels and years with unscheduled elections. Financial stress strengthens these effects.

Publication Type: Article
Additional Information: This is an Accepted Manuscript of an article published by Taylor & Francis Group in Journal of European Public Policy on 28 Mar 2017, available online: http://dx.doi.org/10.1080/13501763.2017.1300182
Publisher Keywords: fiscal policy, European Union, financial crisis, electoral budget cycles, Eurostat
Subjects: H Social Sciences > HG Finance
K Law > KZ Law of Nations
Departments: School of Arts & Social Sciences > International Politics
URI: http://openaccess.city.ac.uk/id/eprint/16139
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