On the legitimacy of fiscal councils in the European Union : trustees or orchestrators of fiscal discipline?

Abstract

This article distinguishes theoretically two conceptual models of a fiscal council – the trustee and the orchestrator model. The article reviews the arguments that prominent advocates of fiscal councils have put forth and finds that those who argue that the deficit bias is caused by the common pool problem prefer the trustee model, while others identifying asymmetric information as the root cause of the deficit bias prefer the orchestrator model. While the latter model relies on throughput legitimacy, the former relies on output legitimacy. The article concludes with a discussion about fiscal councils’ contribution towards strengthening EMU.