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Can budget institutions counteract political indiscipline?

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  • Stefania Fabrizio
  • Ashoka Mody

Abstract

"The budget is an expression of political rather than economic priorities. We confirm this proposition for a group of new and potential members of the European Union, finding that politics dominates. The contemporary practice of democracy can increase budget deficits through not only ideological preferences, but also more fragmented government coalitions and higher voter participation. Long-term structural forces, triggered by societal divisions and representative electoral rules, have more ambiguous implications but also appear to increase budget pressures, as others have also found. However, our most robust, and hopeful, finding is that budget institutions - mechanisms and rules of the budget process - that create checks and balances have significant value in curbing fiscal pressures even when the politics is representative but undisciplined, and when long-term structural forces are unfavourable." Copyright CEPR, CES, MSH, 2006.

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Bibliographic Info

Article provided by CEPR & CES & MSH in its journal Economic Policy.

Volume (Year): 21 (2006)
Issue (Month): 48 (October)
Pages: 689-739

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Handle: RePEc:bla:ecpoli:v:21:y:2006:i:48:p:689-739

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References

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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.:
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  1. Ricardo Hausmann & Alberto Alesina & Rudolf Hommes & Ernesto H. Stein, 1998. "Budget Institutions and Fiscal Performance in Latin America," Research Department Publications 4160, Inter-American Development Bank, Research Department.
  2. Gian Maria Milesi-Ferretti & Roberto Perotti & Massimo Rostagno, 2002. "Electoral Systems And Public Spending," The Quarterly Journal of Economics, MIT Press, vol. 117(2), pages 609-657, May.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Mody on Institutional Change
    by Karl Whelan in The Irish Economy on 2010-07-23 10:19:26
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Roel M.W.J. Beetsma & Frederick van der Ploeg, 2007. "Partisan Public Investment and Debt: The Case for Fiscal Restrictions," Economics Working Papers ECO2007/37, European University Institute.
  2. Ringa Raudla, 2010. "Governing budgetary commons: what can we learn from Elinor Ostrom?," European Journal of Law and Economics, Springer, vol. 30(3), pages 201-221, December.
  3. Stefania Fabrizio & Ashoka Mody, 2010. "Breaking The Impediments To Budgetary Reforms: Evidence From Europe," Economics and Politics, Wiley Blackwell, vol. 22(3), pages 362-391, November.
  4. Ian Lienert, 2007. "British Influence on Commonwealth Budget Systems: The Case of the United Republic of Tanzania," IMF Working Papers 07/78, International Monetary Fund.
  5. Beetsma, Roel & van der Ploeg, Frederick, 2007. "The Political Economy of Public Investment," CEPR Discussion Papers 6090, C.E.P.R. Discussion Papers.
  6. Anthony Annett, 2007. "Toward a Robust Fiscal Framework for Iceland: Motivation and Practical Suggestions," IMF Working Papers 07/235, International Monetary Fund.
  7. Ghiath Shabsigh & Nadeem Ilahi, 2007. "Looking Beyond the Fiscal: Do Oil Funds Bring Macreconomic Stability?," IMF Working Papers 07/96, International Monetary Fund.
  8. Fédéric Holm-Hadulla & Sebastian Hauptmeier & Philipp Rother, 2010. "The impact of numerical expenditure rules on budgetary discipline over the cycle," Working Paper Series 1169, European Central Bank.
  9. Sophia Gollwitzer & Eteri Kvintradze & Tej Prakash & Luis-Felipe Zanna & Era Dabla-Norris & Richard Allen & Irene Yackovlev & Victor Duarte Lledo, 2010. "Budget Institutions and Fiscal Performance in Low-Income Countries," IMF Working Papers 10/80, International Monetary Fund.
  10. Lars-Erik Borge & Torberg Falch & Per Tovmo, 2007. "Public Sector Efficiency: The Roles of Political and Budgetary Institutions, Fiscal Capacity and Democratic Participation," Working Paper Series 8407, Department of Economics, Norwegian University of Science and Technology.
  11. Stefania Fabrizio & Daniel Leigh & Ashoka Mody, 2009. "The second transition: Eastern Europe in perspective," European Economy - Economic Papers 366, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  12. Grigoli, Francesco & Mills, Zachary & Verhoeven, Marijn & Vlaicu, Razvan, 2012. "MTEFs and fiscal performance: panel data evidence," Policy Research Working Paper Series 6186, The World Bank.
  13. F. Heylen & A. Hoebeeck & T. Buyse, 2011. "Fiscal consolidation, institutions and institutional reform: a multivariate analysis of public debt dynamics," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 11/763, Ghent University, Faculty of Economics and Business Administration.
  14. Ana María Iregui & Ligia Melo B. & Jorge Ramos F., 2006. "¿Hacia dónde se dirigen los recursos de Inversión del Presupuesto General de la Nación," BORRADORES DE ECONOMIA 003810, BANCO DE LA REPÚBLICA.
  15. Alexander Plekhanov & Manmohan S. Kumar & Daniel Leigh, 2007. "Fiscal Adjustments: Determinants and Macroeconomic Consequences," IMF Working Papers 07/178, International Monetary Fund.
  16. Koch, Daniel, 2011. "Wirksame Begrenzung von Staatsverschuldung auf europäischer Ebene," Wirtschaftswissenschaftliche Beiträge 114, Julius-Maximilians-Universität Würzburg, Lehrstuhl für Volkswirtschaftslehre, insbes. Wirtschaftsordnung und Sozialpolitik.
  17. Krogstrup, Signe & Wyplosz, Charles, 2010. "A common pool theory of supranational deficit ceilings," European Economic Review, Elsevier, vol. 54(2), pages 269-278, February.

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