Comparative fiscal governance policy: Evaluating the causal impact of fiscal councils on economic performance

This study examines the causal impact of fiscal councils (FCs) on economic performance using a panel dataset of 65 countries from 1990 to 2022. Employing dynamic Difference-in-Differences and two-way fixed effects models, we find that FCs significantly enhance GDP growth and reduce volatility in debt and inflation, particularly in environments with strong institutional frameworks. These results underscore the role of FCs in promoting fiscal discipline and macroeconomic stability, offering valuable insights for policymakers aiming to achieve sustainable development goals (SDG8). By empirically linking FCs to improved economic outcomes, this study addresses a critical gap in the literature and provides robust evidence for the effectiveness of FCs across diverse economic contexts. The findings highlight the importance of adopting FCs, especially in developing economies, to strengthen fiscal governance and foster long-term economic growth.