Jalles, Joao TovarMulas Granados, CarlosTavares, JoséCorrea Caro, Carolina2023-06-172023-06-172018-031350-485110.1080/13504851.2017.1327119https://hdl.handle.net/20.500.14352/13226We examine how exchange rate regimes affect fiscal discipline by investigating European countries as they transitioned from flexible to fully fixed exchange rates under the Euro. We apply the synthetic control method to estimate, for each Eurozone country, its counterfactual budget stance under flexible rates. Our evidence strongly suggests that fixing exchange rates negatively impacted negatively fiscal discipline. However, effects were not homogeneous, as they were mediated by political factors. For example, countries where policymakers faced a longer political horizon and operated within a more cohesive political environment, managed to perform better in terms of fiscal discipline.engjournal articlehttps://doi.org/10.1080/13504851.2017.1327119restricted access336.74H30H60E50Synthetic control methodEuro AreaFixed exchange ratesFiscal disciplinePolitical economyExchange rateStatistical analysisUnión económica y monetaria europea (Unión Europea)Política económica y financieraPolítica fiscal europeaDineroEconometría (Economía)FinanzasIntegración económica5310.08 Acuerdos Monetarios Internacionales5902.06 Política Económica5301.01 Política Fiscal y deuda Publica5304.06 Dinero y Operaciones Bancarias5302 Econometría5309.02 Integración Económica