Fiscal Rules to Tame the Political Budget Cycle

Fiscal Rules to Tame the Political Budget Cycle
Title Fiscal Rules to Tame the Political Budget Cycle PDF eBook
Author Lorenzo Forni
Publisher International Monetary Fund
Pages 20
Release 2017-01-20
Genre Business & Economics
ISBN 1475569971

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The paper provides evidence that fiscal rules can limit the political budget cycle. It focuses on the application of the Italian fiscal rule at the sub-national level over the period 2004-2006 and shows that: 1) municipalities are subject to political budget cycles in capital spending; 2) the Italian subnational fiscal rule introduced in 1999 has been enforced by the central government; 3) municipalities subject to the fiscal rule show more limited political budget cycles than municipalities not subject to the rule. In order to identify the effect, we rely on the fact that the domestic fiscal rule does not apply to municipalities below 5,000 inhabitants. We find that the political budget cycle increases real capital spending by about 35 percent on average in the years prior to municipal elections and that the sub-national fiscal rule reduces these figures by about two thirds.

Fiscal Rules to Tame the Political Budget Cycle

Fiscal Rules to Tame the Political Budget Cycle
Title Fiscal Rules to Tame the Political Budget Cycle PDF eBook
Author Lorenzo Forni
Publisher International Monetary Fund
Pages 20
Release 2017-01-20
Genre Business & Economics
ISBN 147556998X

Download Fiscal Rules to Tame the Political Budget Cycle Book in PDF, Epub and Kindle

The paper provides evidence that fiscal rules can limit the political budget cycle. It focuses on the application of the Italian fiscal rule at the sub-national level over the period 2004-2006 and shows that: 1) municipalities are subject to political budget cycles in capital spending; 2) the Italian subnational fiscal rule introduced in 1999 has been enforced by the central government; 3) municipalities subject to the fiscal rule show more limited political budget cycles than municipalities not subject to the rule. In order to identify the effect, we rely on the fact that the domestic fiscal rule does not apply to municipalities below 5,000 inhabitants. We find that the political budget cycle increases real capital spending by about 35 percent on average in the years prior to municipal elections and that the sub-national fiscal rule reduces these figures by about two thirds.

Do Fiscal Rules Cause Better Fiscal Balances? A New Instrumental Variable Strategy

Do Fiscal Rules Cause Better Fiscal Balances? A New Instrumental Variable Strategy
Title Do Fiscal Rules Cause Better Fiscal Balances? A New Instrumental Variable Strategy PDF eBook
Author Francesca G Caselli
Publisher International Monetary Fund
Pages 27
Release 2019-03-05
Genre Business & Economics
ISBN 1498300863

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This paper estimates the causal effect of fiscal rules on fiscal balances in a panel of 142 countries over the period 1985-2015. Our instrumental variable strategy exploits the geographical diffusion of fiscal rules across countries. The intuition is that reforms in neighboring countries may affect the adoption of domestic reforms through peer pressure and imitational effects. We find that fiscal rules correlate with lower deficits, but the positive link disappears when endogeneity is correctly addressed. However, when considering an index of fiscal rules’ design, we show that well-designed rules have a statistically significant impact on fiscal balances. We conduct several robustness tests and show that our results are not affected by weak instrument problems.

Fiscal Politics

Fiscal Politics
Title Fiscal Politics PDF eBook
Author Vitor Gaspar
Publisher International Monetary Fund
Pages 548
Release 2017-04-07
Genre Business & Economics
ISBN 1475547900

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Two main themes of the book are that (1) politics can distort optimal fiscal policy through elections and through political fragmentation, and (2) rules and institutions can attenuate the negative effects of this dynamic. The book has three parts: part 1 (9 chapters) outlines the problems; part 2 (6 chapters) outlines how institutions and fiscal rules can offer solutions; and part 3 (4 chapters) discusses how multilevel governance frameworks can help.

Advances in Longitudinal Data Methods in Applied Economic Research

Advances in Longitudinal Data Methods in Applied Economic Research
Title Advances in Longitudinal Data Methods in Applied Economic Research PDF eBook
Author Nicholas Tsounis
Publisher Springer Nature
Pages 545
Release 2021-03-31
Genre Business & Economics
ISBN 3030639703

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This volume presents new methods and applications in longitudinal data estimation methodology in applied economic. Featuring selected papers from the 2020 the International Conference on Applied Economics (ICOAE 2020) held virtually due to the corona virus pandemic, this book examines interdisciplinary topics such as financial economics, international economics, agricultural economics, marketing and management. Country specific case studies are also featured.

Dynamic Fiscal Policy

Dynamic Fiscal Policy
Title Dynamic Fiscal Policy PDF eBook
Author Alan J. Auerbach
Publisher
Pages 196
Release 1988
Genre
ISBN

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Fiscal Policy in a Turbulent Era

Fiscal Policy in a Turbulent Era
Title Fiscal Policy in a Turbulent Era PDF eBook
Author Enrique Alberola
Publisher Edward Elgar Publishing
Pages 253
Release 2024-02-12
Genre Business & Economics
ISBN 1035300567

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Recognising the regained importance of fiscal policy over the last two decades, this timely book provides much-needed insight into the changing practice of fiscal policy and how it is adapting to the unpredictable nature of the 21st century. Expert academic and practitioner contributors consider the resources which underpin current fiscal policy, assessing its overall effectiveness before outlining the changing priorities –ageing, inequality, climate change- and the financial tools available, and considering the future of fiscal policy in uncertain times.