Balanced budget rules and fiscal outcomes: Evidence from historical constitutions

Asatryan, Zareh; Castellon, Cesar; Stratmann, Thomas

doi:10.1016/j.jpubeco.2018.09.001

Cited by 72 publications

(26 citation statements)

References 71 publications

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“…Multiple fiscal rules enhance fiscal solvency [23]. The introduction of a balanced budget rule is associated with lower government debt-to-GDP ratios and lower probability of a sovereign debt crisis [24]. This is achieved by decreasing government expenditure.…”

Section: Literature On Fiscal Rulesmentioning

confidence: 99%

Fiscal Rules for Natural Disaster- and Climate Change-Prone Small States

Nakatani

2021

Sustainability

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How should small states formulate a countercyclical fiscal policy to achieve economic stability and fiscal sustainability when they are prone to natural disasters, climate change, commodity price changes, and uncertain donor grants? We study how natural disasters and climate change affect long-term debt dynamics, and we propose cutting-edge fiscal policy rules. We find the primacy of a recurrent expenditure rule based on non-resource and non-grant revenue, interdependently determined by government debt and budget balance targets with expected disaster shocks. This innovative fiscal rule is classified as a natural disaster-resilient fiscal rule, which comprises a plethora of new advantages compared to existing fiscal rules. This new type of fiscal rule can be called as the third-generation fiscal rule. It encompasses natural disasters and climate change, uses budget data only, avoids the need for escape clauses, and operates on a timely basis. Our rule-based fiscal policy framework is practically applicable for many developing countries facing an increasing frequency and impact of devastating natural hazards, and climatic change.

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Section: Literature On Fiscal Rulesmentioning

confidence: 99%

Fiscal Rules for Natural Disaster- and Climate Change-Prone Small States

Nakatani

2021

Sustainability

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“…Employing terminology used by Hathaway ( 2003 ), one can further argue that constitutional fiscal rules have greater internal enforcement as compared to statutory rules. All recent papers, which examine the effectiveness of constitutional fiscal rules, use some version of this argument (Blume & Voigt, 2013 ; Asatryan et al, 2018 ; Amick et al, 2019 ).…”

Section: Introductionmentioning

confidence: 99%

Testing public reaction to constitutional fiscal rules violations

Kantorowicz

2022

Const Polit Econ

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Politicians are less likely to breach constitutional fiscal rules than statutory rules because the breach of constitutional rules arguably puts them in a more negative spotlight and hampers their re-election prospects. This is one of the main arguments for explaining why constitutional fiscal rules tend to be more effective in correcting for political deficit bias vis-à-vis statutory rules. In this paper I isolate the reaction of the public to the potential breach of constitutional fiscal rules from the reaction of other players, such as the opposition, media and civil society organizations. Poland was chosen as a case study because it provides a highly realistic context where the numerical fiscal rule, the 60% of GDP debt limit, is enshrined in both constitutional and statutory laws. To test for the public reaction to constitutional fiscal rules violations, this study gathered data from three well-powered population-based survey experiments. In the first experiment (N = 1,106), a negative, albeit negligible, effect of constitutional breach (as compared to statutory law breach) on the policy approval was identified. The second (N = 1,587) and the third experiment (N = 1,082) displayed null results, i.e., no evidence was found that the public perceived the breach of constitutional fiscal rule as more negative than the violation of the statutory fiscal rule. It therefore seems that, on average, the public tends to care to the same extent about the violations of constitutional and statutory fiscal rules. It is of note that the experiments were conducted in highly unusual circumstances, i.e., in the context the COVID-19 crisis, presidential elections and war. Further and more extended research on these aspects should thus follow.

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“…Employing terminology used by Hathaway (2003), one can further argue that constitutional fiscal rules have greater internal enforcement as compared to statutory rules. All recent papers, which examine the effectiveness of constitutional fiscal rules, use some version of this argument (Blume & Voigt, 2013;Asatryan et al, 2018;Amick et al, 2019).…”

Section: Introductionmentioning

confidence: 99%

Testing Public Reaction to Constitutional Fiscal Rules Violations

Kantorowicz

2022

SSRN Journal

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Balanced budget rules and fiscal outcomes: Evidence from historical constitutions

Cited by 72 publications

References 71 publications

Fiscal Rules for Natural Disaster- and Climate Change-Prone Small States

Fiscal Rules for Natural Disaster- and Climate Change-Prone Small States

Testing public reaction to constitutional fiscal rules violations

Testing Public Reaction to Constitutional Fiscal Rules Violations

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