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The Role of Independent Fiscal Policy Institutions


  • Lars Calmfors


The paper analyses how independent fiscal watchdogs (fiscal policy councils) can strengthen the incentives for fiscal discipline. By increasing fiscal transparency they can raise the awareness of the long-run costs of current deficits and increase the reputational costs for governments of violating their fiscal rules. Councils that make also normative judgements, where fiscal policy is evaluated against the government’s own pre-set objectives, are likely to be more influential than councils that do only positive analysis. To fulfil their role adequately, fiscal watchdogs should be granted independence in much the same way as central banks.

Suggested Citation

  • Lars Calmfors, 2011. "The Role of Independent Fiscal Policy Institutions," CESifo Working Paper Series 3367, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_3367

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    References listed on IDEAS

    1. von Hagen, Jurgen & Wolff, Guntram B., 2006. "What do deficits tell us about debt? Empirical evidence on creative accounting with fiscal rules in the EU," Journal of Banking & Finance, Elsevier, vol. 30(12), pages 3259-3279, December.
    2. Carmen M. Reinhart & Kenneth S. Rogoff, 2011. "From Financial Crash to Debt Crisis," American Economic Review, American Economic Association, vol. 101(5), pages 1676-1706, August.
    3. Simon Wren-Lewis, 2011. "Comparing the delegation of monetary and fiscal policy," Economics Series Working Papers 540, University of Oxford, Department of Economics.
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    Cited by:

    1. Mark Schelker, 2016. "Unabhängige Finanzkontrolle in der Demokratie," CREMA Working Paper Series 2016-06, Center for Research in Economics, Management and the Arts (CREMA).
    2. Lars Calmfors, 2012. "The Swedish Fiscal Policy Council: Watchdog with a Broad Remit," CESifo Working Paper Series 3725, CESifo Group Munich.
    3. 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.

    More about this item


    fiscal institutions; deficit bias; fiscal transparency;

    JEL classification:

    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General


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