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Expenditure Ceilings—A Survey

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  • Gösta Ljungman

Abstract

This paper looks at the factors that have to be considered when designing an aggregate expenditure ceiling. It is argued that expenditure ceilings are effective in promoting fiscal discipline and sustainability, but that a number of trade-offs have to be made when setting up a fiscal framework that will survive in a politically charged environment. The paper illustrates the discussion with a case study of medium-term aggregate expenditure ceilings in three countries: Finland, the Netherlands and Sweden.

Suggested Citation

  • Gösta Ljungman, 2008. "Expenditure Ceilings—A Survey," IMF Working Papers 08/282, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:08/282
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    References listed on IDEAS

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    1. Philip Hemmings & David Turner & Seija Parviainen, 2003. "Enhancing the Effectiveness of Public Spending in Finland," OECD Economics Department Working Papers 358, OECD Publishing.
    2. Nathalie Girouard & Christophe André, 2005. "Measuring Cyclically-adjusted Budget Balances for OECD Countries," OECD Economics Department Working Papers 434, OECD Publishing.
    3. Roubini, Nouriel & Sachs, Jeffrey D., 1989. "Political and economic determinants of budget deficits in the industrial democracies," European Economic Review, Elsevier, vol. 33(5), pages 903-933, May.
    4. Stephen Murchison & Janine Robbins, "undated". "Fiscal Policy and the Business Cycle: A New Approach to Identifying the Interaction," Working Papers-Department of Finance Canada 2003-06, Department of Finance Canada.
    5. Perotti, Roberto, 2005. "Estimating the Effects of Fiscal Policy in OECD Countries," CEPR Discussion Papers 4842, C.E.P.R. Discussion Papers.
    6. Roberto Perotti, 2005. "Estimating the effects of fiscal policy in OECD countries," Proceedings, Federal Reserve Bank of San Francisco.
    7. Barro, Robert J, 1979. "On the Determination of the Public Debt," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 940-971, October.
    8. Jón R. Blöndal, 2006. "Issues in Accrual Budgeting," OECD Journal on Budgeting, OECD Publishing, vol. 4(1), pages 103-119.
    9. Olivier Jean Blanchard, 1990. "Suggestions for a New Set of Fiscal Indicators," OECD Economics Department Working Papers 79, OECD Publishing.
    10. Allen Schick, 2003. "The Role of Fiscal Rules in Budgeting," OECD Journal on Budgeting, OECD Publishing, vol. 3(3), pages 7-34.
    11. Vincent Koen & Paul van den Noord, 2005. "Fiscal Gimmickry in Europe: One-Off Measures and Creative Accounting," OECD Economics Department Working Papers 417, OECD Publishing.
    12. Torben Andersen, 2005. "Is there a Role for an Active Fiscal Stabilization Policy?," CESifo Working Paper Series 1447, CESifo Group Munich.
    13. George Kopits & Steven A. Symansky, 1998. "Fiscal Policy Rules," IMF Occasional Papers 162, International Monetary Fund.
    14. George Kopits, 2001. "Fiscal Rules; Useful Policy Framework or Unnecessary Ornament?," IMF Working Papers 01/145, International Monetary Fund.
    15. Torben M. Andersen, 2005. "Is there a Role for an Active Fiscal Stabilization Policy?," CESifo Economic Studies, CESifo, vol. 51(4), pages 511-547.
    16. Hallerberg, Mark & von Hagen, Jürgen, 1997. "Electoral Institutions, Cabinet Negotiations, and Budget Deficits within the European Union," CEPR Discussion Papers 1555, C.E.P.R. Discussion Papers.
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    Cited by:

    1. Sacchi, Agnese & Salotti, Simone, 2015. "The impact of national fiscal rules on the stabilisation function of fiscal policy," European Journal of Political Economy, Elsevier, vol. 37(C), pages 1-20.
    2. Flodén, Martin, 2013. "A role model for the conduct of fiscal policy? Experiences from Sweden," Journal of International Money and Finance, Elsevier, vol. 34(C), pages 177-197.

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