The fiscal sustainability forecasting model in the member states of the European Union
DOI: https://doi.org/10.3846/tede.2026.27917Abstract
This paper develops an integrated methodological framework for classifying and forecasting fiscal sustainability among the 27 Member States of the European Union, starting from a fundamental economic question: how can EU Member States’ fiscal sustainability be reliably assessed and predicted in a context marked by repeated macroeconomic shocks and institutional heterogeneity? An integrated model for forecasting fiscal sustainability in the European Union is proposed, built upon a well-defined economic hypothesis: fiscal sustainability can be captured by a composite index derived from statistically validated fiscal and macroeconomic indicators. Our approach addresses a major gap in the economic literature, where forecasting models often fail to integrate institutional constraints and policy relevance. By combining advanced statistical techniques and macroeconomic scenario simulation – a Composite Fiscal Sustainability Index (CFSI) is constructed and its predictive performance evaluated under three alternative economic scenarios. The model achieves an overall accuracy of 85.19%, demonstrating strong discriminatory power and the ability to provide early warning signals of fiscal profile transitions. Positioned at the intersection of research on fiscal rules, public debt dynamics, and fiscal stress indicators, this study contributes both a methodological innovation – through an integrated and reproducible forecasting framework – and policy-relevant insights for enhancing fiscal governance within the European Union.
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fiscal sustainability, forecasting, cluster analysis, Composite Fiscal Sustainability Index, European UnionHow to Cite
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