There is no clear-cut evidence on how the adoption of the European

fiscal standards in

uences discretionary fiscal policies within the Member

States. This study investigates that phenomenon on the example of the

2004 enlargement. The results show that the effects of the adoption of EU

fiscal rules bring a statistically significant change towards more counter-

cyclical behavior. The results are robust for different model specifications,

including alternative time spans and correcting for the possible influence

of the financial crises and political forces. Interestingly, the year 2004

did not have any significant impact on the change in fiscal policies in the

Old Member States, suggesting that the EU entry might motivate new

members to run more prudent budgetary policies.