3.4. Do numerical fiscal rules improve budgetary performance?
In this section, the detailed information from the questionnaires on fiscal rules in the EU Member States
is used to analyse whether there is link between numerical fiscal rules and budgetary outcomes. The
analysis is conducted in three stages:
- In a first step, the analysis focuses on the link between the existence of numerical fiscal rules and
budgetary outcomes. It notably looks at whether budgetary developments in the years immediately
following the introduction of rules differ from those typically observed on average during the
sample period 1990-2005 considered in the survey. - In a second step, the analysis takes into account the coverage of fiscal rules and tests the existence
of a link between the share of government finances covered by numerical fiscal rules and
budgetary developments. In order to carry out such a test, a time-varying 'fiscal rule coverage
index' is constructed, for each Member State, which summarises the information on the share of
government finances covered by numerical fiscal rules. - In a third step, the analysis takes into account the characteristics of fiscal rules along with their
coverage. To this aim, an index on the strength of individual fiscal rules is constructed based on
the desirable characteristics of fiscal rules defined in the literature (i.e. statutory base, body in
charge of monitoring, body in charge of enforcement, enforcement mechanisms and media
visibility of the rule).^19
Box 2 – The questionnaire on numerical fiscal rules
In order to collect the most comprehensive and accurate information on the existing numerical fiscal rules in the
EU, a questionnaire was sent to all EU Member States in the context of the Working Group on the Quality of
Public Finances (WGQPF) attached to the Economic Policy Committee (EPC). The questionnaire covers all
types of numerical fiscal rules such as budget balance rules including golden rules, debt rules, expenditure rules
and rules concerning the revenue side of the budget. Member States were invited to fill out one questionnaire
per fiscal rule. The questionnaire considers rules applied to all levels of government. The time frame covered by
the questionnaire is the period from 1990 to 2005. Member States were invited to signal changes in their
definition and/or contents during the period under review. Likewise, Member States were also requested to fill
out the questionnaire for those fiscal rules that had prevailed for a certain period between 1990 and 2005. The
survey is made up of 24 questions, which are grouped in 6 sections:- General description of the rule. This section required Member States to provide information on the
general characteristics of the rule (targeted variable, coverage), the motivations for its introduction, and
the relevant dates of introduction and entering into force of the rule, and concerning the main changes in
the period under review. - Design, time frame coverage, exclusions and target definition of the rule. This section includes
questions concerning the time span covered by the rule (annual / multiannual), specification on the
aggregate targeted (definition of the variable and accounting system in which it is expressed, exclusions
from the coverage of the rule, ratios vs. level and growth rates, aggregates defined in nominal vs. real
term). This section also contains questions related to the properties of the rule. - Statutory base of the rule. This section allows to make a distinction between rules based on political
commitments (coalition agreements, agreement reached by different levels of government), and those
based on legal acts (law, constitution). - Monitoring of compliance with the rule. This section requests information on the body responsible for
the monitoring of the rule. Answers provided by Member States give important indications on whether
(^19) Although there is a close relationship, these characteristics do not have to be confused with the eight criteria listed in
footnote 10 on the design of fiscal rules.