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How Can Fiscal Councils Strengthen Fiscal Performance?


  • Robert Hagemann


There is growing interest in the role of independent fiscal institutions, or fiscal councils, in helping to improve fiscal performance. This article provides some guidance on the scope for improving fiscal performance through fiscal councils based on the available literature and the range of fiscal institutions in the OECD countries. The effectiveness of fiscal councils hinges on several factors, including having full autonomy within the scope of their mandates, active and unfettered dissemination of their analysis, and their credibility. Experience and empirical evidence suggest that delegating macroeconomic forecasting to an independent fiscal council can indeed reduce forecasting bias. There is some empirical evidence that independent fiscal institutions can buttress a government’s capacity to comply with a numerical rule. Good fiscal institutions are a necessary condition for achieving disciplined fiscal performance. Experience demonstrates, however, that their existence is not sufficient. Without strong and sustained political commitment to a medium-term fiscal goal and, where relevant, to the mandate of a fiscal council, durable improvements in fiscal performance will remain elusive.

Suggested Citation

  • Robert Hagemann, 2011. "How Can Fiscal Councils Strengthen Fiscal Performance?," OECD Journal: Economic Studies, OECD Publishing, vol. 2011(1), pages 1-24.
  • Handle: RePEc:oec:ecokac:5kg2d3gx4d5c

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    References listed on IDEAS

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    Cited by:

    1. Thiess Buettner & Bjoern Kauder, 2015. "Political biases despite external expert participation? An empirical analysis of tax revenue forecasts in Germany," Public Choice, Springer, vol. 164(3), pages 287-307, September.
    2. Barry Anderson, 2013. "The Development of Independent Fiscal Institutions: Lessons from CBO," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 149(II), pages 219-230, June.
    3. Aida Caldera Sánchez & Morten Rasmussen & Oliver Röhn, 2016. "Economic Resilience: What Role for Policies?," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 7(02), pages 1-44, June.
    4. Mohamed Zaky & Sarah El khishin, 2016. "Fiscal Governance in Egypt: Strengthening Budgetary Institutions to Counteract Political Fragmentation," Working Papers 1027, Economic Research Forum, revised Jul 2016.
    5. Slawomir Franek, 2016. "Measurement of Fiscal Council Independence in the Countries of the European Union (Pomiar niezaleznosci rad fiskalnych w krajach Unii Europejskiej)," Problemy Zarzadzania, University of Warsaw, Faculty of Management, vol. 14(63), pages 159-168.
    6. Xavier Debrun & Tidiane Kinda, 2017. "Strengthening Post‐Crisis Fiscal Credibility: Fiscal Councils on the Rise – A New Dataset," Fiscal Studies, Institute for Fiscal Studies, vol. 38, pages 667-700, December.
    7. McQuinn, Kieran & Addison-Smyth, Diarmaid, 2015. "Assessing the Sustainable Nature of Housing-Related Taxation Receipts: The Case of Ireland," Papers WP503, Economic and Social Research Institute (ESRI).
    8. Ryta Dziemianowicz & Aneta Kargol-Wasiluk & Renata Budlewska, 2016. "Fiscal Councils As An Element Of The Concept Of Fiscal Governance In The European Union Member States," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 11(4), pages 675-687, December.
    9. Falilou Fall & Debra Bloch & Jean-Marc Fournier & Peter Hoeller, 2015. "Prudent debt targets and fiscal frameworks," OECD Economic Policy Papers 15, OECD Publishing.
    10. Estian Calitz & Krige Siebrits & Ian Stuart, 2013. "Enhancing the credibility of fiscal forecasts in South Africa: Is a fiscal council the only way?," Working Papers 25/2013, Stellenbosch University, Department of Economics.
    11. repec:wsi:jicepx:v:04:y:2013:i:03:n:s1793993313500178 is not listed on IDEAS
    12. McQuinn, Kieran & Roche,Maurice, 2016. "Efficient Frontiers and Fiscal Stability: An Ex-ante and Ex-post Application to the Irish Public Finances," Papers WP538, Economic and Social Research Institute (ESRI).
    13. -, 2014. "Multi-dimensional Review of Uruguay. Volume 1: initial assessment," Coediciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 37080 edited by Cepal, September.
    14. Ryta Dziemianowicz, 2014. "Independent Fiscal Institutions As A Tool Of Fiscal Governance," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 9(1), pages 59-70, March.


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