Do fiscal rules cause budgetary outcomes?
AbstractThis paper focuses on the observed empirical relationship between fiscal rules and budget deficits, and examines whether this correlation is driven by an omitted variable, namely voter preferences. We make use of two different estimation methods to capture voter preferences in a panel of Swiss sub-federal jurisdictions. First, we include a recently constructed measure of fiscal preferences. Second, we capture preferences through fixed effects with a structural break as women are enfranchised. We find that fiscal rules continue to have a significant impact on real budget balances.
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Bibliographic InfoPaper provided by Trinity College Dublin, Department of Economics in its series Trinity Economics Papers with number tep0607.
Length: 27 pages
Date of creation: Apr 2007
Date of revision:
Fiscal policy; fiscal rules; fiscal institutions; budget deficits; fiscal preferences; endogeneity;
Other versions of this item:
- C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
- D7 - Microeconomics - - Analysis of Collective Decision-Making
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
- H6 - Public Economics - - National Budget, Deficit, and Debt
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-05-12 (All new papers)
- NEP-CBA-2007-05-12 (Central Banking)
- NEP-MAC-2007-05-12 (Macroeconomics)
- NEP-PBE-2007-05-12 (Public Economics)
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