Fiscal Rules in Response to the Crisis-Toward the 'Next-Generation' Rules: A New Dataset

Budina, Nina T; Schaechter, Andrea; Weber, Anke; Kinda, Tidiane

doi:10.2139/ssrn.2169733

Cited by 81 publications

(62 citation statements)

References 5 publications

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“…We now turn to features available for each type of FR, namely monitoring outside the government, formal enforcement procedures, and well‐defined escape clauses. Aside from being monitored, FR are subject sometimes to formal enforcement procedures that usually involve close monitoring of adjustment measures, automatic tightening of the targets affecting future budgets, and even correcting actions, with the goal of preventing governments' future reputational costs (Schaechter et al., 2012). Moreover, in search for more flexibility, some countries adopted well‐defined escape clauses with the goal of managing unexpected events (Eyraud et al., 2018).…”

Section: Features Of Fiscal Rulesmentioning

confidence: 99%

“…Based on Schaechter et al. (2012), the features that we analyze are: supporting procedures or institutions, enforcement procedures, flexibility, and the legal basis, to which we add three other features—namely, the number of FR, investment‐friendly FR, and supranational versus national FR. Following the methodological discussion, we present our results in three blocks: (i) features for which we exploit aggregate data for all FR; (ii) features for which we exploit disaggregated data for each type of FR; and (iii) features that are specific to only one type of FR (BBR or ER).…”

Section: Features Of Fiscal Rulesmentioning

confidence: 99%

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How do fiscal rules shape governments' spending behavior?

Vinturis

2022

Economic Inquiry

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At odds with the large literature devoted to the fiscal discipline effects of fiscal rules, only few contributions investigate their impact on public spending.Estimations based on the entropy balancing method reveal the following causal effects: fiscal rules significantly reduce total public spending and public consumption, leave public investment mostly unaffected, and increase the public investment-to-public consumption ratio. Moreover, the type of fiscal rule and countries' level of economic development influence the way fiscal rules affect public spending. Lastly, fiscal rules' features are a major driving force of the way governments change public spending in the presence of fiscal rules.

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Section: Features Of Fiscal Rulesmentioning

confidence: 99%

Section: Features Of Fiscal Rulesmentioning

confidence: 99%

How do fiscal rules shape governments' spending behavior?

Vinturis

2022

Economic Inquiry

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“…It is common practice for countries to implement more than one fiscal rule from the start or over time. This is because each rule presents a tradeoff between its operation and the extent to which it contributes to economic sustainability and stabilization (Schaechter, Kinda, & Budina, 2012). In LAC, half of the countries have combined at least two fiscal rules to complement their scope and ensure that the desired results are obtained in terms of sustainability.…”

Section: Figure 5 Evolution Of Compliance Rate For Latin American And...mentioning

confidence: 99%

Numerical Compliance with Fiscal Rules in Latin America and the Caribbean

Valencia¹,

Ulloa-Suárez²

2022

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This paper introduces a dataset that gathers information on whether and how Latin America and the Caribbean (LAC) have complied with or deviated from implemented fiscal rules. It provides annual data on fiscal rules for 14 LAC countries from 2000 to 2020, and it considers the design features of the rules and information about numerical compliance. It provides descriptive statistics reflecting the panorama of the fiscal rules implemented in LAC countries. Additionally, it calculates compliance rates across countries, years, and rules. On average, this study finds that compliance with rules aiming to constrain debt ratios and structural balances is the highest, while compliance with fiscal balance and expenditure rules is the lowest. Furthermore, the data collection process revealed that LAC countries still have room for discretion even when they subject their fiscal policy to rules. To address this problem, the paper proposes an adjusted compliance index that considers different elements that add degrees of discretion to the rule. The study finds that the numerical compliance rates of each country are likely to be over-estimated once discretionary actions are accounted for.

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“…The source of the data on fiscal rules is "IMF Fiscal Rules Dataset 2016" from the Fiscal Affairs Department of the International Monetary Fund. We follow Schaechter et al (2012) and Bergman and Hutchison (2015) and use the large variety of annual information on rules available in this dataset to construct a composite index measuring the overall strength of rules. We start by constructing four sub-indices for the four types of fiscal rules (expenditure rules, revenue rules, budget balance rules and debt rules).…”

Section: Data and Statistical Outlinementioning

confidence: 99%

Promoting Counter-Cyclical Fiscal Policy: Fiscal Rules Versus Institutions

Keita

Turcu

2022

Comp Econ Stud

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We explore under different exchange rate regimes how fiscal rules and institutions can reduce the procyclical stance of fiscal policy (i.e. how government spending responds to GDP fluctuations). We construct a fiscal rules index which is a composite index measuring the overall strength of fiscal rules in a country at a given time. We use it in a dynamic model with a GMM estimator, for a panel of 153 countries over the period 1993-2015. We find that under fixed exchange rate regimes, while better institutions can reduce procyclicality, rules increase it or do not affect it. This result suggests that under fixed exchange rate regimes, a focus should be put on stronger institutional quality rather than on the adoption of fiscal rules. However, under flexible exchange rate regimes, we find that institutions and rules are complementary in reducing procyclicality. Rules help reduce procyclicality and are more effective, in particular, when institutions are stronger. Our results are robust to different specifications as well as to the use of alternative variables of institutional quality.

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Fiscal Rules in Response to the Crisis-Toward the 'Next-Generation' Rules: A New Dataset

Cited by 81 publications

References 5 publications

How do fiscal rules shape governments' spending behavior?

How do fiscal rules shape governments' spending behavior?

Numerical Compliance with Fiscal Rules in Latin America and the Caribbean

Promoting Counter-Cyclical Fiscal Policy: Fiscal Rules Versus Institutions

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