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The Discipline-Enhancing Role of Fiscal Institutions [electronic resource] : Theory and Empirical Evidence, Debrun, Xavier.

Author/Creator:
Debrun, Xavier.
Publication:
Washington, D.C. : International Monetary Fund, 2007.
Series:
IMF eLibrary
IMF Working Papers; Working Paper No. 07/171.
IMF Working Papers; Working Paper No. 07/171
Format/Description:
Government document
Book
1 online resource (45 p.)
Local subjects:
Budget constraint.
Budget constraints.
Budget deficit.
Budget deficits.
Budget process.
Budgetary policy.
Election.
Elections.
Excessive deficits.
Fiscal adjustment.
Fiscal adjustment process.
Fiscal affairs.
Fiscal affairs department.
Fiscal agencies.
Fiscal arrangement.
Fiscal arrangements.
Fiscal authorities.
Fiscal balance.
Fiscal behavior.
Fiscal conservatism.
Fiscal constitution.
Fiscal council.
Fiscal coverage.
Fiscal decisions.
Fiscal deficits.
Fiscal discipline.
Fiscal framework.
Fiscal frameworks.
Fiscal governance.
Fiscal illusion.
Fiscal institutions.
Fiscal issues.
Fiscal outcomes.
Fiscal outturns.
Fiscal performance.
Fiscal policies.
Fiscal policy.
Fiscal policy decisions.
Fiscal problems.
Fiscal prudence.
Fiscal reaction.
Fiscal reaction functions.
Fiscal restraints.
Fiscal rule.
Fiscal rules.
Fiscal transparency.
Fiscal variables.
Fiscally conservative.
National fiscal rules.
Political parties.
Public debt.
Public finances.
Tax revenues.
Voters.
Voting.
France.
Germany.
Luxembourg.
Switzerland.
Summary:
This paper discusses the role of fiscal institutions, including budget rules and non-partisan agencies, in enhancing fiscal discipline. A dynamic model of fiscal policy shows that optimal institutions lack credibility unless the costs to bypass them are sufficiently high. In our model, a combination of complete budgetary transparency and strong democratic accountability suffice to establish credibility. Under incomplete budgetary transparency, accountable governments may also use institutions as a signal of competence to increase their reelection chances, which in turn erodes the penchant for excessive deficits. In light of the theory, empirical tests of the effectiveness of institutions are undertaken. The results further emphasize that analysis should pay due attention to simultaneity bias (because disciplined governments may be more likely to adopt strict institutions). Also, interactions among different fiscal institutions, and between the latter and key features of the political system need to be explored further.
Notes:
Description based on print version record.
Contributor:
Debrun, Xavier.
Kumar, Manmohan S.
Other format:
Print Version:
ISBN:
1451867352:
9781451867350
ISSN:
1018-5941
Publisher Number:
10.5089/9781451867350.001
Access Restriction:
Restricted for use by site license.
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