The use and effectiveness of fiscal rules and independent fiscal institutions
AbstractIt is increasingly recognised that fiscal rules and independent fiscal institutions other than governments and parliaments can make a major contribution to sound fiscal policy. The main arguments put forward by the specialist literature on political economy in favour of such rules and institutions are the tendency shown by governments to record excessive budget deficits (deficit bias) and the characteristics of a monetary union. Such rules and institutions should restore the balance in the incentives of politicians, impose limits on the fiscal policy pursued and introduce fiscal coordination mechanisms. Fiscal rules can be extremely useful within the scope of a sound fiscal policy. There are clear indications that such rules can facilitate the maintenance of budget discipline and encourage consolidation efforts, where necessary. In order to attain that objective, however, it is essential for the fiscal rules to conform to the principal properties inherent in any ideal fiscal rule. Certain current or former fiscal rules applied in Belgium are strictly complied with, whereas in other cases there appears to be virtually no connection between the rule and what actually happens. There is therefore still room for improvement in some of Belgium’s fiscal rules. Independent fiscal institutions can also play a key role in fiscal policy. For instance, making such institutions responsible for the economic growth forecasts used in drawing up the government budget is an effective way of curbing excess optimism in those forecasts. Moreover, institutions issuing normative budgetary recommendations have fostered fiscal discipline in the countries where such institutions exist. Belgian independent fiscal institutions – namely the National Accounts Institute and the “Public Sector Borrowing Requirements” Section of the High Council of Finance – are often cited as good examples.
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.
Bibliographic InfoArticle provided by National Bank of Belgium in its journal Economic Review.
Volume (Year): (2008)
Issue (Month): II (June)
Contact details of provider:
Postal: Boulevard de Berlaimont 14, B-1000 Bruxelles
Phone: (+ 32) (0) 2 221 25 34
Fax: (+ 32) (0) 2 221 31 62
Web page: http://www.nbb.be/
More information through EDIRC
fiscal rules; independent fiscal institutions; budgetary surveillance;
Find related papers by JEL classification:
- E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
- H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
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.:
- Hallerberg, Mark & Strauch, Rolf & Hagen, Jürgen von, 2006.
"The design of fiscal rules and forms of governance in European Union countries,"
Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems
150, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Hallerberg, Mark & Strauch, Rolf & von Hagen, Jurgen, 2007. "The design of fiscal rules and forms of governance in European Union countries," European Journal of Political Economy, Elsevier, vol. 23(2), pages 338-359, June.
- Hallerberg, Mark & Strauch, Rolf & von Hagen, Jürgen, 2004. "The design of fiscal rules and forms of governance in European Union countries," Working Paper Series 0419, European Central Bank.
- Geert Langenus, 2005. "The stability and growth pact : an eventful history," Economic Review, National Bank of Belgium, issue II, pages 65-81, June.
- Lars Jonung & Martin Larch, 2004.
"Improving fiscal policy in the EU: the case for independent forecasts,"
European Economy - Economic Papers
210, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
- Lars Jonung & Martin Larch, 2006. "Improving fiscal policy in the EU: the case for independent forecasts," Economic Policy, CEPR & CES & MSH, vol. 21(47), pages 491-534, 07.
- M. Nautet & L. Van Meensel, 2011. "Economic impact of the public debt," Economic Review, National Bank of Belgium, issue II, pages 7-19, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.