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Fiscal Rules and the Budget Process


  • Milesi-Ferretti, Gian Maria


This paper examines the rationale for the imposition of fiscal rules as a way to reduce budgetary imbalances. It presents theoretical arguments for the existence of a ‘fiscal deficit bias’ and the empirical evidence on the economic, political and institutional factors leading to this bias. In the context of these findings, it discusses the potential role of legal constraints on the level of key fiscal variables, and of reforms in budgetary procedures in enhancing fiscal discipline. It also evaluates proposals for budgetary reform in Italy.

Suggested Citation

  • Milesi-Ferretti, Gian Maria, 1997. "Fiscal Rules and the Budget Process," CEPR Discussion Papers 1664, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:1664

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    References listed on IDEAS

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    8. George N. Yannopoulos, 1990. "Foreign Direct Investment and European Integration: The Evidence from the Formative Years of the European Community," Journal of Common Market Studies, Wiley Blackwell, vol. 28(3), pages 235-259, March.
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    Cited by:

    1. Robert A.J. Dur & Ben D. Peletier & Otto H. Swank, 1997. "The Effect of Fiscal Rules on Public Investment if Budget Deficits are Politically Motivated," Tinbergen Institute Discussion Papers 97-125/1, Tinbergen Institute.
    2. Francesco Lagona & Fabio Padovano, 2007. "A nonlinear principal component analysis of the relationship between budget rules and fiscal performance in the European Union," Public Choice, Springer, vol. 130(3), pages 401-436, March.
    3. Magda Kandil & Hanan Morsy, 2014. "Fiscal Stimulus and Credibility in Emerging Countries," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 40(3), pages 420-439, June.
    4. Chakraborty, Pinaki & Dash, Bharatee Bhusana, 2013. "Fiscal Reforms, Fiscal Rule and Development Spending: How Indian States have Performed?," Working Papers 13/122, National Institute of Public Finance and Policy.
    5. Guiseppe Pisauro, 2001. "Intergovernmental Relations and Fiscal Discipline; Between Commons and Soft Budget Constraints," IMF Working Papers 01/65, International Monetary Fund.
    6. Frank Bodmer, 2006. "The Swiss Debt Brake: How it Works and What Can Go Wrong," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 142(III), pages 307-330, September.
    7. Gerry Boyle; & Jim O'Leary, 1997. "Controlling Public Spending in Times of Plenty," Economics, Finance and Accounting Department Working Paper Series n741197, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.

    More about this item


    Budget Deficits; Budget Process; Fiscal Rules; Government Spending;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus


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