The Effects Of Fiscal And Monetary Discipline On Budgetary Outcomes
Abstract"This article extends the model of Von Hagen and Harden that analyzed the impact of fiscal discipline on budgetary outcomes. We modify the model by adding monetary discipline to interact with fiscal discipline in order to analyze the effects of both on budgetary outcomes. The model predicts that while both inflation and budget deficits are negatively associated with fiscal discipline, they may be positively associated with monetary discipline, proxied by central bank independence. This result obtains due to optimizing agents internalizing the burden of spending: inflation. Although not conclusive due to data limitations, empirical findings also support these predictions. "("JEL "D73, E58, H61, H72) Copyright 2007 Western Economic Association International.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Western Economic Association International in its journal Contemporary Economic Policy.
Volume (Year): 25 (2007)
Issue (Month): 2 (04)
Contact details of provider:
Postal: 18830 Brookhurst Street, Suite 304, Fountain Valley, CA 92708 USA
Web page: http://www.blackwellpublishing.com/journal.asp?ref=1074-3529
More information through EDIRC
Other versions of this item:
- Bilin Neyapti, 2003. "The Effects Of Fiscal And Monetary Discipline On Budgetary Outcomes," Working Papers, Turkish Economic Association 2003/1, Turkish Economic Association.
- D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
- H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- F. Gulcin Ozkan & Anne Sibert & Alan Sutherland, .
"Monetary Union, Entry Conditions and Economic Reform,"
EPRU Working Paper Series, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics
00-03, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
- Ozkan, F Gulcin & Sibert, Anne & Sutherland, Alan, 1997. "Monetary Union, Entry Conditions and Economic Reform," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1720, C.E.P.R. Discussion Papers.
- F. Gulcin Ozkan & Anne Sibert & Alan Sutherland, . "Monetary Union, Entry Conditions and Economic Reform," Discussion Papers, Department of Economics, University of York 97/15, Department of Economics, University of York.
- Joshua Aizenman & Ricardo Hausmann, 1995.
"The Impact of Inflation on Budgetary Discipline,"
NBER Working Papers
5338, National Bureau of Economic Research, Inc.
- Cukierman, Alex & Webb, Steven B & Neyapti, Bilin, 1992. "Measuring the Independence of Central Banks and Its Effect on Policy Outcomes," World Bank Economic Review, World Bank Group, World Bank Group, vol. 6(3), pages 353-98, September.
- Eijffinger, S-C-W & de Haan, J, 1996.
"The Political Economy of Central-Bank Independence,"
Princeton Studies in International Economics, International Economics Section, Departement of Economics Princeton University,
19, International Economics Section, Departement of Economics Princeton University,.
- Eijffinger, S. & De Hann, J., 1995. "The Political Economy of Central Bank Independence," Papers, Tilburg - Center for Economic Research 9587, Tilburg - Center for Economic Research.
- Alesina, Alberto & Summers, Lawrence H, 1993. "Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 25(2), pages 151-62, May.
- Cukierman, A. & Lippi, F., 1998.
"Central Bank Independence, Centralization of Wage Bargaining, Inflation and Unemployment - Theory and Some Evidence,"
Discussion Paper, Tilburg University, Center for Economic Research
1998-116, Tilburg University, Center for Economic Research.
- Cukierman, Alex & Lippi, Francesco, 1999. "Central bank independence, centralization of wage bargaining, inflation and unemployment:: Theory and some evidence," European Economic Review, Elsevier, Elsevier, vol. 43(7), pages 1395-1434, June.
- International Monetary Fund, 1996.
"Budget Processes and Commitment to Fiscal Discipline,"
IMF Working Papers
96/78, International Monetary Fund.
- von Hagen, Jurgen & Harden, Ian J., 1995. "Budget processes and commitment to fiscal discipline," European Economic Review, Elsevier, Elsevier, vol. 39(3-4), pages 771-779, April.
- Alesina, Alberto & Gatti, Roberta, 1995. "Independent Central Banks: Low Inflation at No Cost?," American Economic Review, American Economic Association, American Economic Association, vol. 85(2), pages 196-200, May.
- Waller, Christopher J & Walsh, Carl E, 1996. "Central-Bank Independence, Economic Behavior, and Optimal Term Lengths," American Economic Review, American Economic Association, American Economic Association, vol. 86(5), pages 1139-53, December.
- Beetsma, Roel & Uhlig, Harald, 1999. "An Analysis of the Stability and Growth Pact," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 109(458), pages 546-71, October.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.