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Fiscal rules and fiscal counter-cyclicality

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  • Jalles, João Tovar

Abstract

We assess the effect of fiscal rules on a new time-varying measure of fiscal counter-cyclicality computed for 60 countries over the period 1980–2014. First, we find that fiscal counter-cyclicality is positive and has been increasing over time, being larger in advanced economies. Second, we find that fiscal rules reduce the degree of fiscal counter-cyclicality. The result is especially strong for debt-based rules in advanced economies. Some design features hinder the degree of fiscal counter-cyclicality (such as escape clauses or enforcement procedures), while others (such as transparency) foster it.

Suggested Citation

  • Jalles, João Tovar, 2018. "Fiscal rules and fiscal counter-cyclicality," Economics Letters, Elsevier, vol. 170(C), pages 159-162.
    • Handle: RePEc:eee:ecolet:v:170:y:2018:i:c:p:159-162
    DOI: 10.1016/j.econlet.2018.06.020
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    References listed on IDEAS

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    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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