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What Should Fiscal Councils Do?

Author

Listed:
  • Lars Calmfors
  • Simon Wren-Lewis

Abstract

The paper analyses theoretically what role fiscal councils could play and surveys empirically the activities of existing councils. Case studies of the Swedish Fiscal Policy Council and the UK Office for Budget Responsibility are done. It is concluded that fiscal councils should be advisory, rather than decision-making, and work as complements, rather than substitutes, to fiscal rules. A key issue is the political fragility of fiscal councils and how their long-run viability should be secured. Three ways of guaranteeing their independence are suggested: (1) reputation-building; (2)formal national rules; and (3) international monitoring.

Suggested Citation

  • Lars Calmfors & Simon Wren-Lewis, 2011. "What Should Fiscal Councils Do?," CESifo Working Paper Series 3382, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_3382
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp3382.pdf
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    References listed on IDEAS

    as
    1. Schmitt-Grohe, Stephanie & Uribe, Martin, 2004. "Optimal fiscal and monetary policy under sticky prices," Journal of Economic Theory, Elsevier, vol. 114(2), pages 198-230, February.
    2. Leith, Campbell & Wren-Lewis, Simon, 2006. "Compatibility between monetary and fiscal policy under EMU," European Economic Review, Elsevier, vol. 50(6), pages 1529-1556, 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.
    4. Simon Wren-Lewis, 2010. "Macroeconomic policy in light of the credit crunch: the return of counter-cyclical fiscal policy?," Oxford Review of Economic Policy, Oxford University Press, vol. 26(1), pages 71-86, Spring.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    deficit bias; fiscal rules; fiscal councils;

    JEL classification:

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

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