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Fiscal rules: the imitation game

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  • Dorian Balvir

Abstract

De jure fiscal rules have known a rapidly increasing popularity worldwide. This paper aims at analysing their spatial diffusion in 108 countries over the period 2001–2015 using a pooled version of the Bayesian SAR probit model. Using two different types of weighting (geographic proximity and bilateral trade) and desegregating the results for specific rules, I find a significant and positive spatial lag in line with the imitation (strategic complementarity) hypothesis. Rational imitation, deriving from a race to fiscal credibility, is preferred over the blind imitation hypothesis as the mimetic behaviour is revealed only in countries facing weaker fiscal reputation.

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  • Dorian Balvir, 2024. "Fiscal rules: the imitation game," Applied Economics, Taylor & Francis Journals, vol. 56(6), pages 708-727, February.
    • Handle: RePEc:taf:applec:v:56:y:2024:i:6:p:708-727
    DOI: 10.1080/00036846.2023.2170969
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