This paper shows that compromise between different ideological motivations within multiparty governments may result in a bias toward running budget deficits even if all parties in the coalition prefer balanced budgets. The deficit bias increases with the degree of "polarization" of the...

Fiscal discipline is a public good in federations. As with all public goods, there is a free-riding risk. Hence the need for discipline-inducing mechanisms. EU countries decided to adopt a rule-based framework, which is currently heavily criticised and which may come under further pressure with...