Flexibility or Erosion? A Comparative Qualitative Analysis of the Adjustment of National Fiscal Rules in Response to A Global Economic Shock

Huy Oanh Nguyen

doi:10.56201/ijbfr.vol.11.no10.2025.pg38.44

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Flexibility or Erosion? A Comparative Qualitative Analysis of the Adjustment of National Fiscal Rules in Response to A Global Economic Shock

Huy Oanh Nguyen

Abstract

This study aims to conduct a comparative analysis of the adjustment of fiscal rules in response to the COVID-19 shock, thereby answering the question of whether this was an expression of healthy institutional flexibility or the beginning of an erosion of fiscal discipline. Using a qualitative, comparative method on two cases with distinct institutional settings - the European Union (EU) and several Latin American countries (Chile, Brazil, Colombia) the paper employs process-tracing and policy discourse analysis. The results show that the answer is critically dependent on the quality of fiscal institutions. In the EU, strong supranational institutions and a pre-defined escape clause allowed for controlled flexibility without eroding credibility. Conversely, in the Latin American countries, the absence of similar mechanisms and weaker supervisory institutions meant that ad-hoc adjustments posed a risk of undermining long-term fiscal discipline.

Keywords

Fiscal rulesfiscal policyeconomic shockfiscal institutions

References

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Flexibility or Erosion? A Comparative Qualitative Analysis of the Adjustment of National Fiscal Rules in Response to A Global Economic Shock

Abstract

Keywords

References

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