Working papers, Department of Economics, WU (Wirtschaftsuniversität Wien)
The Case for Fiscal Rules
() and Wolf Heinrich Reuter
Abstract: This paper estimates the effects of fiscal institutions on
fiscal policy outcomes, addressing issues related to measurement and
endogeneity in a novel way. Recently developed indices, based on partially
ordered set theory, are used to quantify the stringency of fiscal rules.
Identification of their effects is achieved by exploiting the exogeneity of
institutional variables (checks and balances, government fragmentation,
inflation targeting), which are found to be relevant determinants of fiscal
rules. Our two-stage least squares estimates for (up to) 79 countries over
the period 1985-2012 provide strong evidence that countries with more
stringent fiscal rules have higher fiscal balances (lower deficits), lower
interest rate spreads on government bonds, and lower output volatility.
Keywords: Fiscal rules, fiscal balances, interest rates, volatility; (follow links to similar papers)
JEL-Codes: E62,; H30,; H60; (follow links to similar papers)
Before downloading any of the electronic versions below
you should read our statement on
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Design Joakim Ekebom