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The world’s oldest fiscal watchdog: CPB’s analyses foster consensus on economic policy

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  • Frits Bos

    ()

  • Coen Teulings

Abstract

The sovereign debt problems in European countries have increased the interest in fiscal watchdogs. This paper discusses the world’s oldest fiscal watchdog, CPB Netherlands Bureau for Economic Policy Analysis (CPB). Read also the article at "VoxEU.org" , a blog at "Mostly Economics" and the presentation used by Coen Teulings during a Joint Conference by the IMF Fiscal Affairs Department and the Swedish Ministry of Finance, on issues surrounding fiscal consolidation and medium-term budgetary frameworks. CPB was founded directly after World War II. It has built a reputation of independence and quality, while it has also achieved a solid position in Dutch policy making. CPB provides (i) the macroeconomic forecast underlying the annual budget, (ii) a midterm review of the state of public finance at the start of each election cycle, (iii) cost-benefit analyses of all kind of policy proposals (from education to physical infrastructure),  and (iv) an assessment of the economic impact of the platforms of political parties before the election. Four lessons can be drawn from 65 years of Dutch experience. Firstly, a reputation of quality and independence is crucial for the success of a watchdog. Building such a reputation takes time. Secondly, the scope of activities should not be limited to fiscal policy only. The broad scope of CPB’s analyses has contributed to shared public understanding of relevant trade-offs and policy options. Thirdly, the effectiveness of CPB depends crucially on a clear demarcation of the distinctive roles of CPB and political parties. Welfare theory provides little guidance in drawing this demarcation line. Fourthly, being part of the government has the advantage of getting inside information and being effective in the daily policy making process, but the disadvantage that the actual or perceived independence is more difficult to maintain.

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Bibliographic Info

Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Discussion Paper with number 207.

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Date of creation: Mar 2012
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Handle: RePEc:cpb:discus:207

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  1. Donders, Jan & Graafland, Johan, 1998. "CPB models and employment policy in the Netherlands," Economic Modelling, Elsevier, vol. 15(3), pages 341-356, July.
  2. Henk Don & Johan Verbruggen, 2006. "Models and methods for economic policy; 60 years of evolution at CPB," CPB Discussion Paper 55, CPB Netherlands Bureau for Economic Policy Analysis.
  3. Alan J. Auerbach & Jagadeesh Gokhale & Laurence J. Kotlikoff, 1991. "Generational Accounts - A Meaningful Alternative to Deficit Accounting," NBER Working Papers 3589, National Bureau of Economic Research, Inc.
  4. Coen Teulings & Frits Bos, 2010. "CPB and Dutch fiscal policy in view of the financial crisis and ageing," CPB Document 218, CPB Netherlands Bureau for Economic Policy Analysis.
  5. Frits Bos, 2006. "The development of the Dutch national accounts as a tool for analysis and policy," Statistica Neerlandica, Netherlands Society for Statistics and Operations Research, vol. 60(2), pages 225-258.
  6. Bos, Frits & Teulings, Coen, 2011. "Evaluating election platforms: a task for fiscal councils? Scope and rules of the game in view of 25 years of Dutch practice," MPRA Paper 31536, University Library of Munich, Germany.
  7. Bovenberg, A.L., 1997. "Challenging neighbours: Rethinking German and Dutch economic institutions," Open Access publications from Tilburg University urn:nbn:nl:ui:12-74446, Tilburg University.
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