Independent Fiscal Councils and Legislative Budget Powers

Independent fiscal councils are claimed to mitigate political failures in fiscal policymaking and increase fiscal performance. However, to influence and persuade policymakers these watchdog councils need to have access at different stages of the budget process. This paper examines the extent to which fiscal outcomes are shaped by fiscal monitoring and the budget amendment powers of legislative assemblies. An analysis of 40 mostly industrialized countries between 2000 to 2018 shows that the impact of monitoring on fiscal outcomes is large when legislative authority over the budget is restricted. Conversely, it is mostly ineffective when chambers have unrestricted budget powers. This relationship is particularly pronounced in EU member states. The findings indicate that monitoring does well when addressing governments, yet its success depends on the inability of the legislature to amend the budget. More research is needed to examine how fiscal monitoring is integrated into political and institutional frameworks