The Economic Consequences of Fiscal Rules

Arbeitspapier

Fiscal rules are controversial. They mitigate politicians' flexibility in responding to shocks and pursuing expansionary fiscal policy. They help, however, to handle politicians' commitment problem in fiscal policies. I portray the new and fast growing empirical literature in public economics that examines the economic consequences of fiscal rules. The survey encompasses the literature on fiscal rules at the national, sub-national and local level. The results show that fiscal rules reduce budget deficits, public spending and borrowing costs and increase GDP growth. The results do not suggest that fiscal rules decrease public investment. Future research should examine in more detail the unintended effects of fiscal rules such as how they relate to creative accounting.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 10765

Classification and Topics

• Classification: Wirtschaft ; National Government Expenditures and Related Policies: General ; National Budget, Deficit, and Debt: General ; State and Local Government; Intergovernmental Relations: General ; Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: General, International, or Comparative ; Economic Development: General ; General Regional Economics (includes Regional Data)
• Subject: fiscal rules

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Potrafke, Niklas
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/282453
• Last update: 10.03.2025, 11:43 AM CET