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Fiscal Policy: Too Political?

Author

Listed:
  • Petr Hedbávný
  • Ondøej Schneider

Abstract

The paper provides an analysis of the role of fiscal rules. The authors first provide a rationale for the existence of fiscal rules, namely to avoid a governmental bias toward budget deficits. The paper then surveys existing fiscal rules and analyzes their applicability in the context of the Czech Republic. The authors argue that the institutional arrangement of fiscal policy should mirror the arrangement that has emerged as regards monetary policy, namely a certain separation of powers in which an independent body would be responsible for setting the overall budget deficit level. In the case of the Czech Republic, the authors argue that the country needs a simple and transparent fiscal rule rather than a more sophisticated and seemingly more appropriate rule.

Suggested Citation

  • Petr Hedbávný & Ondøej Schneider, 2003. "Fiscal Policy: Too Political?," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 53(11-12), pages 462-476, December.
  • Handle: RePEc:fau:fauart:v:53:y:2003:i:11-12:p:462-476
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    File URL: http://journal.fsv.cuni.cz/storage/952_01_462-476.pdf
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    Citations

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    Cited by:

    1. Adam Geršl, 2007. "Political Economy of Public Deficit: Perspectives for Constitutional Reform," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 1(1), pages 67-86, March.
    2. Ondřej Schneider & Petr Hedbávný & Jan Zápal, 2007. "A Fiscal Rule that Has Teeth: A Suggestion for a “Fiscal Sustainability Council” Underpinned by the Financial Markets," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 1(1), pages 32-53, March.
    3. Vyprachticka, Terezie, 2011. "Could the Stability and Growth Pact be Substituted by the Financial Markets?," European Integration online Papers (EIoP), European Community Studies Association Austria (ECSA-A), vol. 15, September.

    More about this item

    Keywords

    fiscal policy; fiscal rules; public budgets;

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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