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The Effects of Fiscal Institutions on Public Finance: A Survey of the Empirical Evidence

  • Gebhard Kirchgässner

This paper surveys the empirical research on fiscal institutions of the last three decades. The main results are: (i) Constitutional or statutory fiscal limitations have in most cases proved to be effective in cutting down public expenditure, revenue, and debt. (ii) Budgetary proce-dures matter as well. They might be less effective than constitutional or statutory rules, but in a situation where it is impossible to introduce such rules they might present a feasible second-best way to reach fiscal sustainability. (iii) Citizens demand fewer public services and a sounder fiscal policy in systems with direct legislation than in purely parliamentary systems. (iv) There is some evidence that fiscal federalism leads  ceteris pari-bus  to a smaller size of the government. There are also political institutions which have an impact on the public budg-ets, and there are some interactions between the different institutions.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 617.

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Date of creation: 2001
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Handle: RePEc:ces:ceswps:_617
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