David Dreyer Lassen publishes paper in British Journal of Political Science
"It Isn't Just about Greece: Domestic Politics, Transparency and Fiscal Gimmickry in Europe."
This article analyzes the political origins of differences in adherence to the fiscal framework of the European Union (EU). It shows how incentives to use fiscal policy for electoral purposes and limited budget transparency at the national level, combined with the need to respond to fiscal rules at the supranational level, interact to systematically undermine the Economic and Monetary Union through the employment of fiscal gimmicks or creative accounting. It also explains in detail how national accounts were manipulated to produce electoral cycles that were under the radar of the EU budget surveillance system, and concludes with new perspectives on the changes to (and challenges for) euro area fiscal rules.
The paper received funding from the Economic Policy Research Network (EPRN), is available here and supersedes an earlier version called “Moral Hazard in an Economic Union: Politics, Economics, and Fiscal Gimmickry in Europe."
James Alt (Harvard University)
David Dreyer Lassen (University of Copenhagen)
Joachim Wehner (LSE)