Department of Economics Working Papers,
Vienna University of Economics and Business, Department of Economics

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

JEL-codes: E62; H30; H60 August 2015

Note: PDF Document

Full text files

wp204.pdf  

Download statistics

• Vienna University of Economics and Business, Department of Economics
• Home page for this series

Report problems with accessing this service to Sune Karlsson ().

RePEc:wiw:wiwwuw:wuwp204This page generated on 2024-12-21 04:36:22.