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Do Balanced Budget Laws Matter in Recessions?

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  • Haizhen Mou
  • Michael M. Atkinson
  • Stephen Tapp

Abstract

Since the mid†1990s, most Canadian provinces have enacted balanced budget laws (BBLs). Critics argue that these laws are empty political gestures that are ignored during economic slowdowns. We consider BBLs in the Canadian provinces from 1981 to 2013 and find that provinces with stronger rules had better deficit and debt records overall. Recessions make it more difficult to achieve positive outcomes, but we find no obvious difference between the effects of BBLs during normal economic conditions and “bad times.†We conclude with suggestions for how the design of BBLs could take better account of jurisdiction†specific business cycles.

Suggested Citation

  • Haizhen Mou & Michael M. Atkinson & Stephen Tapp, 2018. "Do Balanced Budget Laws Matter in Recessions?," Public Budgeting & Finance, Wiley Blackwell, vol. 38(1), pages 28-46, March.
    • Handle: RePEc:bla:pbudge:v:38:y:2018:i:1:p:28-46
    DOI: 10.1111/pbaf.12163
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    Cited by:

    1. Haizhen Mou & Maritza Lozano Man Hing, 2021. "Stringency of balanced budget laws and transparency of budgeting process," Public Budgeting & Finance, Wiley Blackwell, vol. 41(2), pages 45-64, June.
    2. Zhang, Guoxing & Deng, Nana & Mou, Haizhen & Zhang, Zhe George & Chen, Xiaofeng, 2019. "The impact of the policy and behavior of public participation on environmental governance performance: Empirical analysis based on provincial panel data in China," Energy Policy, Elsevier, vol. 129(C), pages 1347-1354.
    3. Niklas Potrafke, 2023. "The Economic Consequences of Fiscal Rules," CESifo Working Paper Series 10765, CESifo.

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