Abstract: Extant works on the political causes of fiscal discipline poorly account for the oversight of national budgets via the European Union's excessive deficit procedure. These studies emphasize three mechanisms: political fragmentation, national budgetary rules, and proximity to elections. The impact of the first has diminished since the 1990s and that of the second is inconsistent. Unlike skeptical views, I argue that this EU regime displays several features international relations scholars deem important to ensure compliance. I extend the work of Fortunato and Loftis (2018) to the 1994- 2019 period and show that a eurozone government under surveillance for a full year reduces, on average, its deficit by 0.46% of GDP. This almost fully offsets the impact on the deficit of a two-year shortening of the expected duration of a government.

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