A fiscal council is an independent body set up by a government to evaluate its expenditure and tax policy . Typically, councils are staffed by economists and statisticians who do not have the ability to set policy, but provide advice to governments and the public on the economic effects of government budgets and policy proposals. Some fiscal councils also provide economic forecasting . Fiscal councils evaluate government's fiscal policies , plans and performance publicly and independently, against macroeconomic objectives related to the long-term sustainability of public finances, short-to-medium-term macroeconomic stability, and other official objectives.
6-522: The EU Independent Fiscal Institutions Network ( EU IFIs ) is a voluntary and inclusive institution open to all independent fiscal oversight bodies operating in the EU. It provides a platform to exchange views, expertise and pool resources in areas of common concern. It was formally created in September 2015 following the meeting of EU fiscal oversight bodies. The Network supports the efforts to review and reinforce
12-556: The Centre for European Policy Studies (CEPS) . Fiscal council Several fiscal councils arose following the financial crisis of 2007–08 with the intention of avoiding debt crises and alleviating the problem of deficit bias , which is a tendency of governments to allow increasing long-term deficits. Analysis from the International Monetary Fund proposes that deficit bias results from both voters and policy-makers –
18-470: The EU fiscal framework, seeking to better exploit the synergies between rules and institutions, as well as between different levels of administration whilst respecting the principle of subsidiarity and enhancing local ownership and accountability. The network is currently headed by Sander van Veldhuizen, Chair of the CPB Netherlands Bureau for Economic Policy Analysis . The Secretariat is managed by
24-462: The detriment of heterodox economic approaches based on the real economy and more interventionist New Keynesian approaches to the business cycle . More countries in the world run budget deficits than not. In the long term, a high budget deficit is unsustainable. High budget deficits have aggravated crises like the European debt crisis . Governments that are unsure of being re-elected may ignore
30-432: The former through imperfect information on budgets and neglect for future generations, and the latter through imperfect information , information asymmetries , electoral pressures, a common-pool problem among government agencies, and a combination over optimistic spending and growth projections. Fiscal councils alleviate deficit bias by providing independent non-partisan estimates of government income, and by reminding
36-557: The public of the government's intertemporal budget constraint. The public will then, in theory, react to this information by supporting governments that deliver sustainable fiscal policies and electorally punishing governments that are fiscally irresponsible. Fiscal councils, such as the United Kingdom's Office for Budget Responsibility , have been criticised for mostly advising from the perspective of neoclassical economics and advocating for balanced-budgets and small government , to
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