Introduction

Constraining rules are bound to give rise to opportunistic behaviors designed to elude them. In examining the Maastricht budgetary rules, therefore, one should expect opportunistic accounting behaviors. These may be called “creative accounting” in the sense that they do not reflect reality but rather are designed to demonstrate that constraints are met. Such behaviors may be considered kinds of intended or unintended fiscal illusion. The study of creative accounting is therefore at the core of the issue of budgetary transparency.

Because of the scope for opportunistic behaviors, some have expressed skepticism about the possibility of truly enforcing constitutional fiscal rules, consisting of parametric constraints (Von Hagen, 1991). However, it is argued here that in the context of the Maastricht rules, it is possible to limit substantially the scope of opportunistic behavior. The real problem is the willingness of the relevant authorities to accept inescapable constitutional fiscal constraints. Thus far, the authorities have tolerated or even fostered a climate in which the political considerations of a smooth launch of the European Monetary Union (EMU) have been held to be more important than the application of the constraints.

The Inadequacies in the Accounting Setting of the Maastricht Fiscal Constitution Rules

The Maastricht Fiscal Constitution

The Treaty of Maastricht of 1992 introduces a set of rules constraining the budget and the public debt for the countries expected to become members of the EMU.