The Impact of Fiscal Rules on Long-Term Borrowing Costs in EU Countries AB Ülkelerinde Mali Kuralların Kamu Borçlanma Maliyeti Üzerindeki Etkileri

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Baydak C., Yendi-Çetin İ.

Sosyoekonomi, vol.34, no.67, pp.285-299, 2026 (ESCI, Scopus, TRDizin) identifier

  • Publication Type: Article / Article
  • Volume: 34 Issue: 67
  • Publication Date: 2026
  • Doi Number: 10.17233/sosyoekonomi.2026.01.12
  • Journal Name: Sosyoekonomi
  • Journal Indexes: Emerging Sources Citation Index (ESCI), Scopus, TR DİZİN (ULAKBİM)
  • Page Numbers: pp.285-299
  • Keywords: Fiscal Rules, Government Borrowing Cost, Public Debt
  • Hacettepe University Affiliated: Yes

Abstract

Fiscal credibility denotes the public’s trust in the government’s fiscal plans; it is defined as the government’s ability to meet its debt obligations and to comply with planned tax and expenditure policies. The primary purpose of this study is to analyse the relationship between fiscal rule practices and long-term interest rates by examining the determinants of public borrowing costs. Empirical results from selected European Union (EU) countries for 2001-2018 show that improvements in the fiscal rule index are associated with lower long-term interest rates, and that the effect of public debt levels on borrowing costs is nonlinear. The results of the analysis show that the adoption of fiscal rule practices will contribute to establishing fiscal credibility, which represents confidence in the government's fiscal policies and their ability to fulfil their financial obligations, and to enable countries to finance their deficits at a lower cost.