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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, 2022. "Fiscal Rules: The imitation game," LEO Working Papers / DR LEO 2961, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    • Handle: RePEc:leo:wpaper:2961
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    Cited by:

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    Keywords

    ; Policy diffusion; Bayesian SAR probit model; Imitation; Spatial auto-correlation; Strategic complements; Fiscal Rules;
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