Expenditure Rules: Effective Tools for Sound Fiscal Policy?

ByTill Cordes, Tidiane Kinda, Priscilla S Muthoora

February 12, 2015

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper provides new evidence on the effectiveness of expenditure rules. The analysis is based on a unique dataset covering all countries with national and supranational fiscal rules, including 33 expenditure rules, between 1985 and 2013. It contributes to the existing literature on fiscal rules in two main ways. First, it is the most comprehensive assessment of compliance with rules and of the potential role of expenditure rules, in particular regarding long-term sustainability. Second, it analyzes whether expenditure rules are associated with changes in public investment and its efficiency.

Subject: Expenditure, Fiscal policy, Fiscal rules, Fiscal stance, Public investment spending

Keywords: country, debt rule, expenditure cap, expenditure constraint, expenditure pressure, expenditure rule, Expenditure rules, expenditure target, expenditure targets in Israel, Fiscal governance, Fiscal policy, Fiscal rules, Fiscal stance, Global, growth rule, implementation of an expenditure rule, national expenditure, Public investment spending, rule, rule characteristic, rule index, Rules versus discretion, Stabilization, WP

Pages:
29
Volume:
2015
DOI:
https://doi.org/10.5089/9781498390576.001
Issue:
029
Series:
Working Paper No. 2015/029
Stock No:
WPIEA2015029
ISBN:
9781498390576
ISSN:
1018-5941

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