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On the macroeconomic effects of fiscal reforms: fiscal rules and public expenditure efficiency

Author

Listed:
  • Ablam Estel Apeti

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Bao We Wal Bambe

    (LEO - Laboratoire d'Économie d'Orleans [2022-...] - UO - Université d'Orléans - UT - Université de Tours - UCA - Université Clermont Auvergne)

  • Jean-Louis Combes

    (LEO - Laboratoire d'Économie d'Orleans [2022-...] - UO - Université d'Orléans - UT - Université de Tours - UCA - Université Clermont Auvergne)

Abstract

We ask whether fiscal rules improve public expenditure efficiency. That is, after computing efficiency scores for a panel of 159 countries of all income levels over the period 1990-2017, we apply the entropy balancing method to assess the effect of fiscal rules on the scores obtained, thus mitigating selection bias. Evidence suggests that implementing a fiscal rule significantly increases expenditure efficiency, with economically significant effects. Robustness was checked using a range of economic and econometric tests. Moreover, we show that our findings are neither driven by a spurious trend, nor by confounding factors, nor are they confounded by the effects of other reforms such as inflation targeting, IMF programs or fiscal consolidation episodes. Finally, further analysis suggests that the effect of fiscal rules on public expenditure efficiency is subject to some heterogeneity, depending on the types of rules, their design, macroeconomic factors as well as time elapsed since the reform adoption.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Ablam Estel Apeti & Bao We Wal Bambe & Jean-Louis Combes, 2025. "On the macroeconomic effects of fiscal reforms: fiscal rules and public expenditure efficiency," Post-Print hal-05009458, HAL.
    • Handle: RePEc:hal:journl:hal-05009458
    DOI: 10.1007/s11127-025-01275-4
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    Cited by:

    1. Apeti,Ablam Estel & Ly,Alpha, 2023. "Power Constraints and Firm-Level Total Factor Productivity in Developing Countries," Policy Research Working Paper Series 10510, The World Bank.
    2. Apeti, Ablam Estel & Bambe, Bao-We-Wal & Combes, Jean-Louis & Edoh, Eyah Denise, 2024. "Original sin: Fiscal rules and government debt in foreign currency in developing countries," Journal of Macroeconomics, Elsevier, vol. 80(C).
    3. Apeti, Ablam Estel & Obeng, Samuel & Tagem, Abrams & Were, Maureen, 2025. "Sovereign Default and Public Debt: What role for Fiscal Rules?," The Warwick Economics Research Paper Series (TWERPS) 1567, University of Warwick, Department of Economics.
    4. Apeti, Ablam Estel & Ly, Alpha, 2024. "Power constraints and firm-level total factor productivity in developing countries," Energy, Elsevier, vol. 309(C).
    5. Bambe, Bao-We-Wal & Ouedraogo, Adama, 2025. "Public expenditure efficiency and foreign direct investment in developing countries," IDOS Discussion Papers 16/2025, German Institute of Development and Sustainability (IDOS).
    6. Sawadogo, Rayangnewendé Frans, 2024. "Do fiscal rules shape private-sector investment decisions?," Journal of Macroeconomics, Elsevier, vol. 81(C).
    7. repec:hal:wpaper:hal-04130477 is not listed on IDEAS
    8. Chrysanthakopoulos, Christos & Bouloumpasis, Panagiotis & Skotoris, Manolis & Tagkalakis, Athanasios, 2025. "The macroeconomic effects of public sector efficiency in advanced economies," International Economics, Elsevier, vol. 182(C).
    9. López-Herrera, Carmen & Cordero, José M. & Pedraja-Chaparro, Francisco & Polo, Cristina, 2023. "Fiscal rules and their influence on public sector efficiency," MPRA Paper 119018, University Library of Munich, Germany.

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