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Do fiscal rules constrain political budget cycles?

Author

Listed:
  • Bram Gootjes
  • Jakob de Haan
  • Richard Jong-A-Pin

Abstract

We examine whether fiscal rules constrain incumbent governments to use fiscal policy for re-election purposes. Using data on fiscal rules provided by the IMF for a sample of 77 (advanced and developing) countries over the 1984-2015 period, we find that after the Global Financial Crisis political budget cycles occur only in countries with weak fiscal rules. This conclusion is robust for the inclusion of other conditioning factors for political budget cycles identified in the literature (such as media freedom, the presence of checks and balances, and the maturity of democracy) and for controlling for the potential endogeneity of fiscal rules.

Suggested Citation

  • Bram Gootjes & Jakob de Haan & Richard Jong-A-Pin, 2019. "Do fiscal rules constrain political budget cycles?," DNB Working Papers 634, Netherlands Central Bank, Research Department.
  • Handle: RePEc:dnb:dnbwpp:634
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    References listed on IDEAS

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    Cited by:

    1. Amelie Barbier-Gauchard & Kea Baret & Alexandru Minea, 2020. "National Fiscal Rules and Fiscal Discipline in the European Union," Working Papers hal-02992219, HAL.

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    More about this item

    Keywords

    political budget cycles; fiscal policy; fiscal rules;
    All these keywords.

    JEL classification:

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

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