Impact of the Constitutional Law on Budget Responsibility on the Fiscal Position of the Slovak Government

The paper evaluates the effect of the Constitutional Act on Budget Responsibility no. 493/2011 Coll. on the public debt of the Slovak Republic, by comparing the synthetic and real Slovakia, employing the synthetic control method. We examine the behavioral effect of the implementation of the fiscal rule on the government as well as the parliament. Based on the model we have estimated, we construct a contrafactual indebtedness of the Slovak government and we compare it with the observed indebtedness after the law of Budget Responsibility has been implemented. We are contributing to the literature by employing a similar approach as Salvi, Schaltegger, and Schmid (2020) did for Switzerland with the empirical evidence for the Slovak republic. Our analysis indicates that the effect of the Constitutional Act on the budget responsibility in Slovakia, measured by the public debt, was observed in our analysis, but remained statistically insignificant in the contrafactual period.