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Federal Budget Rules: The US Experience

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  • Alan J. Auerbach

Abstract

Like many other developed economies, the United States has imposed fiscal rules in attempting to impose a degree of fiscal discipline on the political process of budget determination. The federal government has operated under a series of budget control regimes that have been complex in nature and of debatable impact. Much of the complexity of these federal budget regimes relates to the structure of the U.S. federal government. The controversy over the impact of different regimes relates to the fact that the rules have no constitutional standing, leading to the question of whether they do more than clarify a government's intended policies. In this paper, I review US federal budget rules and present some evidence on their possible effects. From an analysis of how components of the federal budget behaved under the different budget regimes, it appears that the rules did have some effects, rather than simply being statements of policy intentions. The rules may also have had some success at deficit control, although such conclusions are highly tentative given the many other factors at work during the different periods. Even less certain is the extent to which the various rules achieved whatever objectives underlay their introduction.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14288.

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Date of creation: Aug 2008
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Publication status: published as Alan Auerbach, 2009. "US Experience with Federal Budget Rules," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 7(1), pages 41-48, 04.
Handle: RePEc:nbr:nberwo:14288

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  1. James M. Poterba, 1996. "Do Budget Rules Work?," NBER Working Papers 5550, National Bureau of Economic Research, Inc.
  2. Alan J. Auerbach, 2003. "Fiscal Policy, Past and Present," NBER Working Papers 10023, National Bureau of Economic Research, Inc.
  3. Dharmapala, Dhammika, 2006. "The Congressional budget process, aggregate spending, and statutory budget rules," Journal of Public Economics, Elsevier, Elsevier, vol. 90(1-2), pages 119-141, January.
  4. Auerbach, Alan J., 2006. "Budget windows, sunsets, and fiscal control," Journal of Public Economics, Elsevier, Elsevier, vol. 90(1-2), pages 87-100, January.
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Cited by:
  1. Popescu, Razvan-Florin & Prodan, Sergiu, 2010. "The analysis of budget rules and macroeconomic implications in several developed economies," MPRA Paper 25897, University Library of Munich, Germany, revised 2010.
  2. Momi Dahan & Michel Strawczynski, 2010. "Fiscal Rules and Composition Bias in OECD Countries," CESifo Working Paper Series 3088, CESifo Group Munich.
  3. Feld Lars P. & Baskaran Thushyanthan, 2010. "Federalism, Budget Deficits and Public Debt: On the Reform of Germany's Fiscal Constitution," Review of Law & Economics, De Gruyter, De Gruyter, vol. 6(3), pages 365-393, December.
  4. Chakraborty, Pinaki & Dash, Bharatee Bhusana, 2013. "Fiscal Reforms, Fiscal Rule and Development Spending: How Indian States have Performed?," Working Papers, National Institute of Public Finance and Policy 13/122, National Institute of Public Finance and Policy.
  5. Andersen, Jørgen Juel, 2011. "The form of government and fiscal dynamics," European Journal of Political Economy, Elsevier, vol. 27(2), pages 297-310, June.
  6. Lars P. Feld, 2010. "Sinnhaftigkeit und Effektivität der deutschen Schuldenbremse," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, Verein für Socialpolitik, vol. 11(3), pages 226-245, 08.
  7. António AFONSO & Priscilla TOFFANO, 2013. "Fiscal regimes in the EU," Center for Economic Studies - Discussion papers, Katholieke Universiteit Leuven, Centrum voor Economische Studiën ces13.06, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  8. Alan Auerbach, 2009. "US Experience with Federal Budget Rules," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, Ifo Institute for Economic Research at the University of Munich, vol. 7(1), pages 41-48, 04.
  9. Alan J. Auerbach, 2009. "Implementing the New Fiscal Policy Activism," NBER Working Papers 14725, National Bureau of Economic Research, Inc.
  10. Alberto Botta, 2012. "Conflicting Claims in the Eurozone? Austerity’s Myopic Logic and the Need for a European Federal Union in a post-Keynesian Eurozone Center-Periphery Model," DEM Working Papers Series 011, University of Pavia, Department of Economics and Management.
  11. Becker, Johannes Gerd & Gersbach, Hans & Grimm, Oliver, 2010. "Debt-sensitive Majority Rules," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7860, C.E.P.R. Discussion Papers.
  12. Alan J. Auerbach & William G. Gale & Benjamin H. Harris, 2010. "Activist Fiscal Policy," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 24(4), pages 141-64, Fall.
  13. Joris de Wind, 2014. "Time variation in the dynamic effects of unanticipated changes in tax policy," CPB Discussion Paper 271, CPB Netherlands Bureau for Economic Policy Analysis.
  14. Buiter, Willem H. & Patel, Urjit R., 2010. "Fiscal Rules in India: Are They Effective?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7810, C.E.P.R. Discussion Papers.
  15. Hans Gersbach, 2014. "Government Debt-Threshold Contracts," Economic Inquiry, Western Economic Association International, vol. 52(1), pages 444-458, 01.

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