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Budget Rules, Government Efficiency and Economic Growth

Author

Listed:
  • Skrypnik, D.

    (Central Economics and Mathematics Institute, Russian Academy of Sciences, Moscow, Russia
    Institute of Economics, Russian Academy of Sciences, Moscow, Russia)

Abstract

The paper reviews international experience of budget balance, expenditure and debt rules implementation. Using dynamic panel data regressions with interactive term we show that character of rules influence on economic growth rate is determined by the government efficiency. Rules would not work in case of low-efficient government, which is not able to adhere the rule. In case of middle-efficient government the rule could be an obstacle for optimal budget policy, which requires flexibility. The efficient governments adjust and readjust the rule precisely, that doesn't lead to restriction of economic growth. Growth effect of rules occurred only when government achieved high efficient level. We show that impact of rules on the Russian economy growth is negative.

Suggested Citation

  • Skrypnik, D., 2016. "Budget Rules, Government Efficiency and Economic Growth," Journal of the New Economic Association, New Economic Association, vol. 30(2), pages 12-32.
    • Handle: RePEc:nea:journl:y:2016:i:30:p:12-32
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    fiscal rule; economy growth; dynamic panel regression;
    All these keywords.

    JEL classification:

    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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