Impact of Fiscal Rules on Government Expenditure and Tax Revenue in Emerging European Countries: Threshold Effect of Budget Deficit

Abstract

This study aims to investigate the effectiveness of fiscal rules in terms of government expenditure and tax revenues with and without the threshold effect of the budget deficit over the period 1995 -2019 in 9 1 emerging European countries, as the frequency and severity of the implementation of fiscal rules vary according to the level of the budget deficit. To achieve this objective, the study firstly examines this relationship using the fixed and random effect methods without considering the threshold effect of budget deficit. Secondly, the study employs the panel threshold method proposed by Hansen (1999) to examine this relationship with the threshold effect of budget deficit, which is different from previous studies. Based on the panel threshold estimation, the results reveal that there are two threshold levels of budget deficit on government expenditure and a single threshold level of budget deficit on government tax revenue. Depending on these thresholds, the effect of fiscal rules on government expenditure and tax revenue varies significantly. This suggests that fiscal rules are more effective in ensuring fiscal discipline when the budget deficit is high and less effective when the budget deficit is low.

Naturaleza Y Sistematización Metodológica De Los Estudios Fiscales Y Tributarios

“…De acuerdo a la literatura científica, se observa una perspectiva de enfoque económico en los estudios de Vinturis (2023), Heise (2023), Chrysanthakopoulos & Tagkalakis (2023), Heimberger (2023a), Heimberger (2023b), Apeti, Combes & Minea (2023), Vinturis (2022), Minea & Turcu (2022, Gootjes & de Haan (2022), Aldama & Creel (2022), Köktaş & Günel (2022), Saadaoui, Lau & Cai (2022), Ybrayev, Kubenbayev & Baimagambetov (2022, Postuła (2022), Broner, Clancy, Erce & Martin (2022), Bonam, Ferdinandusse & Jacquinot (2022), Barbier-Gauchard, Baret, & Minea (2021), Blanchard, Leandro & Zettelmeyer (2021, Caselli & Reynaud (2020), van der Wielen (2020), Sawadogo (2020), Kataryniuk & Vallés (2018).…”

“…La literatura científica consultada en los últimos cinco años demuestra que la discusión y reflexión sobre la metodología en los estudios fiscales y tributarios aún no está resuelta ni delimitada. En materia económica, Vinturis (2023), Heise (2023), Chrysanthakopoulos & Tagkalakis (2023), Heimberger (2023a), Heimberger (2023b), Apeti, Combes & Minea (2023), Vinturis (2022), Minea & Turcu (2022), Gootjes & de Haan (2022), Aldama & Creel (2022), Köktaş & Günel (2022), Saadaoui, Lau & Cai (2022), Ybrayev, Kubenbayev & Baimagambetov (2022), Postuła (2022), Broner, Clancy, Erce & Martin (2022), Bonam, Ferdinandusse & Jacquinot (2022), El presente se propone situar el análisis de la metodología dentro de los estudios fiscales, en particular, desde una aproximación social dinámica y una lógica jurídica que marca la mecánica de la realidad, entendida como aquella que promueve el análisis de la norma desde la observación de la realidad social. Se pretende presentar algunas reflexiones metodológicas sobre el diseño de una investigación que se ubica en el campo de las ciencias sociales en general, pero atiende tres campos específicos del conocimiento que se basan en las ciencias económicas, jurídicas y administrativas.…”

The Influence of Transparency on Municipal Taxation: An Empirical Analysis

“…High levels of debt can lead to increased tax revenues (Cuamatzin, 2006) as also may be the case for deficits. When deficits increase, some governments may raise taxes to reduce them (Kȍktaş & Günel, 2022). Another variable of interest is transfers from other governments as a source of financing for local governments.…”