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Budgeting for fiscal space and government performance beyond the great recession

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  • Mario Marcel

Abstract

In the course of the prolonged economic crisis that started in 2008, fiscal space has become a scarce commodity in OECD countries. This has not only broadened the appeal of a concept originally raised by emerging countries in the early 2000s, but has also extended its meaning to recognise its intertemporal nature and to highlight its endogenous features. Current projections indicate that fiscal consolidation needs and the effect of demographic change on social security may shrink non-pension fiscal space in OECD countries by some 18% between 2011 and 2030, exceeding current consolidation plans in many countries. The response to these needs should take place increasingly through budgets rather than ad hoc consolidation packages. To this end, the quest for fiscal space needs to be mainstreamed into budgeting by developing appropriate tools and procedures; the effort needs to extend beyond the annual budget process both in timeframe and scope; and many actors need to contribute to this effort in addition to ministries of finance and budget offices. In other words, generating fiscal space at the required scale needs not only a substantial revamping of budget practices, but also revisiting the temporal and institutional framework within which budgeting takes place.JEL classification: H50, H61, H83 Keywords: Budget practices, budget framework, economic crisis, fiscal space, fiscal consolidation, incrementalist, performance, recession

Suggested Citation

  • Mario Marcel, 2014. "Budgeting for fiscal space and government performance beyond the great recession," OECD Journal on Budgeting, OECD Publishing, vol. 13(2), pages 9-47.
  • Handle: RePEc:oec:govkaa:5jz2jw9t0pd3
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    File URL: http://dx.doi.org/10.1787/budget-13-5jz2jw9t0pd3
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    Cited by:

    1. Daniela Monacelli & Aline Pennisi, 2015. "Spending Review: una, nessuna, centomila," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2015(1), pages 69-108.
    2. Durga P. Gautam, 2014. "Remittances and Governance: Does the Government Free Ride?," Working Papers 14-40, Department of Economics, West Virginia University.
    3. Duygun, Meryem & Ozturk, Huseyin & Shaban, Mohamed, 2016. "The role of sovereign credit ratings in fiscal discipline," Emerging Markets Review, Elsevier, vol. 27(C), pages 197-216.

    More about this item

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration

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