The Role of Fiscal Expenditure Rules in Maintaining the Financial Stability of the State

Abstract

One of the main challenges which legal science faces nowadays is the creation of legal mechanisms guaranteeing sound public finance. The aim of this article is to assess the role of national fiscal rules in maintaining financial stability. Firstly, to fulfi l this aim, the role of fiscal rules and their efficiency was analysed. Next, based on the commonly used tool assessing the quality of national fiscal rules – the Fiscal Rule Index – the quality of expenditure rules in the EU countries was analysed in order to evaluate the Polish stabilising expenditure rule and the escape clause of its application. Therefore, the following research question is to be answered: whether in the face of an unstable financial situation of the state connected with an increasing deficit, deviation from the stabilising expenditure rule should be considered as being right. Research methods based on non-reactive research, i.e., analysis of professional literature, legal acts, and statistical data published by the European Commission, were used in this article. Due to this analysis, it was indicated that expenditure rules are regarded as one of the most effective tools to manage public funds, and therefore any derogations from the application of these rules should be evaluated negatively. ; e.lotko@uwb.edu.pl ; Ewa Lotko - is a Ph.D. and Assistant Professor in the Department of Public Finance and Financial Law, Faculty of Law, University of Bialystok, Poland. ; University of Bialystok, Poland ; Anderson B., Minarik J.J., Design choices for fiscal policy rules, (in:) Fiscal Policy: current issues and challenges, Research Department Public Finance Workshop, Banca d'Italia 2007. ; Ayuso-i-Casals J., Deroose S., Flores E., Moulin L., Policy Instruments for Sound Fiscal Policies. 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