The Disciplining Impact of Local Fiscal Rules in the EU
Abstract
ABSTRACT Although research highlights the discipline‐enhancing effect of fiscal rules at the national level, little is known about their impact on local budgets. We employ a dynamic fiscal reaction function within an LSDVC framework to explore the relevance of different local fiscal rules in the EU using a panel dataset of 26 European countries over a 26‐year period (1997–2022). Our findings suggest that debt rules and expenditure rules have a positive relation with budget discipline on the local level. Thus, the mere existence of a DR is less relevant compared to its strength. Consequently, rule design should receive greater attention.
Fields of Study & Subjects
Fiscal Policies and Political Economy
Local Government Finance and Decentralization
Regional Development and Policy
Publication details
- Journal / source
- Public Budgeting & Finance
- Publisher
- Wiley
- Volume
- 46
- Issue
- 3
- Pages
- 40–56
- Publication date
- 26 January 2026
- Language
- EN