Featured Article It Isn’t Just about Greece: Domestic Politics, Transparency and Fiscal Gimmickry in Europe

This article analyzes the political origins of differences in adherence to the fiscal framework of the European Union (EU). It shows how incentives to use fiscal policy for electoral purposes and limited budget transparency at the national level, combined with the need to respond to fiscal rules at the supranational level, interact to systematically undermine the Economic and Monetary Union through the employment of fiscal gimmicks or creative accounting. It also explains in detail how national accounts were manipulated to produce electoral cycles that were under the radar of the EU budget surveillance system, and concludes with new perspectives on the changes to (and challenges for) euro area fiscal rules. The establishment of the euro followed fifty years of ever-deeper European integration and was initially seen as a success. In recent years, however, problems surrounding the euro have absorbed most of the EU’s energies.1 Many economists warned that the risk of moral hazard in the form of imperfectly observable slack fiscal discipline meant that a common currency could not, and would not, function without strong coordinatio