Impact of Governments’ Fiscal Behaviors on Public Finance Sustainability: A Comparative Study

Abstract

The aim of this research is to highlight the specificity of fiscal sustainability in some developing EU countries by analyzing the implications of fiscal rules on governments’ fiscal behaviors. We employ a panel data analysis to evaluate developing EU countries for the period 2000–2014 and we investigate the status of convergence of fiscal responsibility coordinates by computing the convergence score of fiscal responsibility. The research is based on interdisciplinary coordinates and helps to consolidate judgments from both legal and financial perspectives, making a contribution to the literature that investigates the relationship between the legal framework related to government decision-making and public finance sustainability. The choice of the study sample in relation to developing EU countries represents a contribution and a point of reference for the literature that investigates the sustainability of developing EU countries and highlights the importance of fiscal risk management and control mechanisms in enhancing the performance of the public sector and fiscal sustainability. The results suggest that it is important to reinforce the interaction between the legal framework and the institutional one by identifying good practices for designing and operating effective independent fiscal institutions, making them capable not only of advising the government on fiscal policy matters but also of promoting sound fiscal policy and sustainable public finance.