Democratic Accountability, Deficit Bias, and Independent Fiscal Agencies
IMF Working Papers, July 1, 2011
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- Democratic Accountability, Deficit Bias, and Independent Fiscal Agencies
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Bibliographic details
- Authors: Xavier Debrun
- Published: July 1, 2011
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781462313327.001
Summary
- Despite growing interest among policymakers, there is no theory of independent fiscal institutions.
- The emerging literature on "fiscal councils" typically makes informal parallels with the theory of central bank independence, but a very simple formal example shows that such a shortcut is flawed.
- The paper illustrates key features of a model of independent fiscal agencies, and in particular the need:
- (1) to incorporate the intrinsically political nature of fiscal policy - which precludes credible delegation of instruments to unelected decisionmakers; and
- (2) to focus on characterizing "commitment technologies" likely to credibly increase fiscal discipline.
Model features and key findings
- Informal parallels with central bank independence are inadequate; a formal example demonstrates the flaw in that shortcut.
- Fiscal policy's intrinsically political nature:
- Precludes credible delegation of instruments to unelected decisionmakers.
- Effective institutional design should emphasize commitment technologies:
- Characterize mechanisms likely to credibly increase fiscal discipline rather than rely on delegation of instruments.
Subjects and keywords
- Subjects:
- Budget planning and preparation
- Central bank autonomy
- Central banks
- Fiscal policy
- Inflation
- Prices
- Public debt
- Public financial management (PFM)
- Keywords:
- Africa
- assessment of competence
- bias of the kind
- Budget planning and preparation
- central bank
- Central bank autonomy
- deficit bias
- deficit ceiling
- deficit contract
- delegation
- equilibrium deficit
- Fiscal councils
- fiscal policy
- fiscal policy decision
- Inflation
- inflation contract
- policy mistake
- public goods
- WP
Xavier Debrun. "Democratic Accountability, Deficit Bias, and Independent Fiscal Agencies", IMF Working Papers 2011, 173 (2011), accessed 9/17/2026, https://doi.org/10.5089/9781462313327.001