A key characteristic of public finances is that governments and politicians spend money drawn from a general tax fund on policies targeting specific groups. This common-pool problem leads to excessive levels of public spending, deficits and public debts. Fractionalization of societies or political systems increases this tendency, making common-pool problem more severe. Several important features of budgetary policy will depend on the ability of political actors to achieve cooperative outcomes. Fiscal sustainability is a gauge of the state of the budget balance and debt levels. Relative adaptability of a given budget is also important because of excessive rigidities may have to resort to inefficient adjustments or become more vulnerable to crises. Fiscal sustainability implies ability to strike and enforce intertemporal political agreements. This ability affects quality of fiscal policy and depends on institutional makeup of the budget process. A main argument of the article is that collective action failures often occur because political bargaining breaks down.

This paper takes an actor-centered institutionalism view of fiscal discipline and aims to identify the main political determinants of the different fiscal policy consolidations of the CEECs. The political constraints due to conflict of interest is general answer and need to make collective choices in the face of this conflicts. A fuzzy-set Qualitative Comparative Analysis serves to identify political conditions behind the fiscal stabilizations.