Law, Focal Points, and Fiscal Discipline in the United States and the European Union

• Published in: The American political science review Vol. 108; no. 2; pp. 355 - 370
• Main Authors: KELEMEN, R. DANIEL, TEO, TERENCE K.
• Format: Journal Article
• Language: English
• Published: New York, USA Cambridge University Press 01.05.2014
• Subjects: Academic Language; Balanced budgets; Bond markets; Bonds; Borrowing; Cost; Courts; Credit ratings; Debt; Debt (Financial); Decision-making; Deterrence; Effectiveness; Enforcement; Euro Zone; Eurocurrency market; Europe; European Union; Eurozone; Federal budget deficit; Financial Policy; Fiscal policy; Focal points; Judicial process; Law; Law enforcement; Logical Thinking; Markets; Political science; Public officials; Punishment; Regulation; Rule of law; Sovereign debt; Sovereignty; State budgets; State Government; Threats; Treaties; U.S.A; United States; United States > US

Many studies suggest that strict balanced budget rules can restrain sovereign debt and lower sovereign borrowing costs, even if those rules are never enforced in court. Why might public officials adhere to a rule that is practically never enforced in court? Existing literature points to a legal dete...