TY - UNPB
T1 - The Case for Fiscal Rules
AU - Badinger, Harald
AU - Reuter, Wolf Heinrich
PY - 2015
Y1 - 2015
N2 - 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. (authors' abstract)
AB - 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. (authors' abstract)
UR - http://www.wu.ac.at/economics/forschung/wp/
U2 - 10.57938/7f6e2138-ba5c-49a6-a24c-39e42154ec1d
DO - 10.57938/7f6e2138-ba5c-49a6-a24c-39e42154ec1d
M3 - WU Working Paper
T3 - Department of Economics Working Paper Series
BT - The Case for Fiscal Rules
ER -