Since the mid-1970s, high and continuing budget deficits, along with rapidly increasing state debt, have become burning problems of fiscal policy for most OECD countries. In many, state debt has become so large that it threatens national currency stability. In addition, the increasing portion of the budget that is taken up with servicing the national debt impedes a satisfactory realization of the proper duties of the state. Explaining the reasons for this ongoing fiscal crisis, as well as suggesting possible solutions, are the foci of this project. Two questions guide it:
- to what extent are parliamentary decision-making processes capable of controlling the effects of a nation's political structure on its budget?
- is it possible to identify decision-making processes that are suitable for controlling the effects on fiscal policy, given the varying structural weaknesses of countries?
As part of this project, MZES guest researcher Mark Hallerberg (Georgia Institute of Technology, Atlanta; autumn 1996) worked on a model of budgetary planning in which only a majority had to approve. This model was then applied to the EU budget process; the results are available in an MZES Working Paper.
