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The Effectiveness of Fiscal Rules - The Case of Switzerland

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  • Marianne Yousseff ISKANDAR

    (Department of Economics, in German University in Cairo, Egypt.)

Abstract

This paper aims to measure the effectiveness of fiscal rules. Fiscal rules are constraints on fiscal policy that limit budgetary outcomes. Some studies in the literature have examined their effectiveness using a stringency index. Arguing this index possesses some arbitrariness, this study measured the effectiveness of fiscal rules using cluster analysis. This cluster analysis resulted in dividing the data into two clusters. Using panel data of 26 Swiss cantons plus the Swiss federation over the period 1990 - 2012, a Least Squares Dummy Variable econometric model was conducted. The findings indicate that fiscal rules have a favorable effect. It was found that the frameworks of cantons in cluster 1 are more effective in decreasing cantonal deficits than those of cluster 2. Furthermore, it was found that cantons in cluster 1 have lower debt levels in comparison to cantons in cluster 2.

Suggested Citation

  • Marianne Yousseff ISKANDAR, 2016. "The Effectiveness of Fiscal Rules - The Case of Switzerland," Journal of Social and Administrative Sciences, KSP Journals, vol. 3(3), pages 264-267, September.
    • Handle: RePEc:ksp:journ4:v:3:y:2016:i:3:p:264-267
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    References listed on IDEAS

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    1. Frank Bodmer, 2006. "The Swiss Debt Brake: How it Works and What Can Go Wrong," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 142(III), pages 307-330, September.
    2. Dirk-Jan Kraan & Michael Ruffner, 2006. "Budgeting in Switzerland," OECD Journal on Budgeting, OECD Publishing, vol. 5(1), pages 37-78.
    3. Chatagny, Florian, 2015. "Incentive effects of fiscal rules on the finance minister's behavior: Evidence from revenue projections in Swiss Cantons," European Journal of Political Economy, Elsevier, vol. 39(C), pages 184-200.
    4. Simon Luechinger & Christoph Schaltegger, 2013. "Fiscal rules, budget deficits and budget projections," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(5), pages 785-807, October.
    5. Lars P. Feld & Gebhard Kirchgassner, 2006. "On the Effectiveness of Debt Brakes: The Swiss Experience," CREMA Working Paper Series 2006-21, Center for Research in Economics, Management and the Arts (CREMA).
    6. Dirk Niepelt & Christoph A. Schaltegger, 2013. "The Swiss Debt Brake - Ten Years On," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 149(II), pages 111-113, June.
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    Cited by:

    1. Picchio, Matteo & Santolini, Raffaella, 2020. "Fiscal rules and budget forecast errors of Italian municipalities," European Journal of Political Economy, Elsevier, vol. 64(C).

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    More about this item

    Keywords

    Fiscal rules; Qualitative data analysis; Regional governments; Government spending;
    All these keywords.

    JEL classification:

    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • C80 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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