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Independent Fiscal Councils: Recent Trends and Performance

Author

Listed:
  • Mr. Roel M. W. J. Beetsma
  • Mr. Xavier Debrun
  • Xiangming Fang
  • Young-Bae Kim
  • Victor Duarte Lledo
  • Samba Mbaye
  • Xiaoxiao Zhang

Abstract

Countries increasingly rely on independent fiscal councils to constrain policymakers’ discretion and curb the bias towards excessive deficits and pro-cyclical policies. Since fiscal councils are often recent and heterogeneous across countries, assessing their impact is challenging. Using the latest (2016) vintage of the IMF Fiscal Council Dataset, we focus on two tasks expected to strengthen fiscal performance: the preparation or assessment of forecasts, and the monitoring of compliance with fiscal rules. Tentative econometric evidence suggests that the presence of a fiscal council is associated with more accurate and less optimistic fiscal forecasts, as well as greater compliance with fiscal rules.

Suggested Citation

  • Mr. Roel M. W. J. Beetsma & Mr. Xavier Debrun & Xiangming Fang & Young-Bae Kim & Victor Duarte Lledo & Samba Mbaye & Xiaoxiao Zhang, 2018. "Independent Fiscal Councils: Recent Trends and Performance," IMF Working Papers 2018/068, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2018/068
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    More about this item

    Keywords

    WP; output gap; bond yield; interest rate; independent fiscal councils; fiscal rule compliance; fiscal forecasts; fiscal council; IFC dummy; government effectiveness; absolute value; EU law; council interaction; public finance; Fiscal councils; Fiscal rules; Fiscal stance; Budget planning and preparation; Europe; Global;
    All these keywords.

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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