IDEAS home Printed from https://ideas.repec.org/p/oec/ecoaaa/829-en.html
   My bibliography  Save this paper

Improving Fiscal Performance Through Fiscal Councils

Author

Listed:
  • Robert P. Hagemann

    (OECD)

Abstract

There is growing interest in the role of independent fiscal institutions, or fiscal councils, in helping to improve fiscal performance. This paper provides some guidance on the scope for improving fiscal performance through fiscal councils based on the available literature and the range of fiscal institutions in the OECD countries. The effectiveness of fiscal councils hinges on several factors, including having full autonomy within the scope of their mandates, active and unfettered dissemination of their analysis and their credibility. Experience and empirical evidence suggest that delegating macroeconomic forecasting to an independent fiscal council can indeed reduce forecasting bias. There is some empirical evidence that independent fiscal institutions can buttress a government’s capacity to comply with a numerical rule. Good fiscal institutions are a necessary condition for achieving disciplined fiscal performance. Experience demonstrates, however, that their existence is not sufficient. Without strong and sustained political commitment to a medium-term fiscal goal and, where relevant, to the mandate of a fiscal council, durable improvements in fiscal performance will remain elusive. This working paper relates to the 2010 OECD Economic Survey of the Euro Area (www.oecd.org/eco/surveys/euroarea). Améliorer la performance budgétaire à travers des conseils budgétaires Un intérêt croissant est accordé au rôle des institutions budgétaires indépendantes, ou conseils budgétaires, pour contribuer à l’amélioration des résultats budgétaires. Ce document fournit quelques indications sur la possibilité d’améliorer ces résultats par le biais des conseils budgétaires, en se basant sur la littérature existante et sur la gamme des institutions budgétaires dans les pays de l’OCDE. L’efficacité des conseils budgétaires dépend de plusieurs facteurs, notamment de leur entière indépendance dans l’exercice de leur mandat, d’une communication active et sans restrictions de leurs analyses et de leur crédibilité. L’expérience et les données empiriques montrent que déléguer les prévisions macroéconomiques à un conseil budgétaire indépendant peut effectivement réduire les erreurs de prévision. Selon les données empiriques, les institutions budgétaires indépendantes peuvent étayer la capacité d’un gouvernement à respecter une règle numérique. De bonnes institutions budgétaires sont une condition nécessaire pour la discipline budgétaire. Toutefois, l’expérience montre que leur existence ne suffit pas. Sans un engagement politique fort et durable envers un objectif budgétaire à moyen terme et, le cas échéant, envers le mandat d’un conseil budgétaire, des améliorations pérennes de la performance budgétaire resteront illusoires. Ce document de travail a été réalisé dans le cadre de l'Étude économique de la Zone euro 2010. (www.oecd.org/eco/etudes/zoneeuro).

Suggested Citation

  • Robert P. Hagemann, 2010. "Improving Fiscal Performance Through Fiscal Councils," OECD Economics Department Working Papers 829, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:829-en
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1787/5km33sqsqq9v-en
    Download Restriction: no

    References listed on IDEAS

    as
    1. Beetsma, Roel M. W. J. & Bovenberg, A. Lans, 1999. "Does monetary unification lead to excessive debt accumulation?," Journal of Public Economics, Elsevier, vol. 74(3), pages 299-325, December.
    2. Blanchard, Olivier J & Giavazzi, Francesco, 2004. "Improving the SGP Through a Proper Accounting of Public Investment," CEPR Discussion Papers 4220, C.E.P.R. Discussion Papers.
    3. Torsten Persson & Lars E. O. Svensson, 1989. "Why a Stubborn Conservative would Run a Deficit: Policy with Time-Inconsistent Preferences," The Quarterly Journal of Economics, Oxford University Press, vol. 104(2), pages 325-345.
    4. von Hagen, Jurgen & Wolff, Guntram B., 2006. "What do deficits tell us about debt? Empirical evidence on creative accounting with fiscal rules in the EU," Journal of Banking & Finance, Elsevier, vol. 30(12), pages 3259-3279, December.
    5. Xavier Debrun & David Hauner & Manmohan S. Kumar, 2009. "Independent Fiscal Agencies," Journal of Economic Surveys, Wiley Blackwell, vol. 23(1), pages 44-81, February.
    6. Carmen M. Reinhart & Kenneth S. Rogoff, 2014. "This Time is Different: A Panoramic View of Eight Centuries of Financial Crises," Annals of Economics and Finance, Society for AEF, vol. 15(2), pages 1065-1188, November.
    7. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters,in: This Time Is Different: Eight Centuries of Financial Folly Princeton University Press.
    8. Alberto Alesina & Guido Tabellini, 1990. "A Positive Theory of Fiscal Deficits and Government Debt," Review of Economic Studies, Oxford University Press, vol. 57(3), pages 403-414.
    9. Martin Mühleisen & Kornelia Krajnyak & Stephan Danninger & David Hauner & Bennett W Sutton, 2005. "How Do Canadian Budget Forecasts Compare with Those of Other Industrial Countries?," IMF Working Papers 05/66, International Monetary Fund.
    10. Rogoff, Kenneth, 1990. "Equilibrium Political Budget Cycles," American Economic Review, American Economic Association, vol. 80(1), pages 21-36, March.
    11. Lars Calmfors, 2003. "Fiscal Policy to Stabilise the Domestic Economy in the EMU: What Can We Learn from Monetary Policy?," CESifo Economic Studies, CESifo, vol. 49(3), pages 319-353.
    12. Wachtel, Paul & Young, John, 1987. "Deficit Announcements and Interest Rates," American Economic Review, American Economic Association, vol. 77(5), pages 1007-1012, December.
    13. Charles Wyplosz, 2005. "Fiscal Policy: Institutions versus Rules," National Institute Economic Review, National Institute of Economic and Social Research, vol. 191(1), pages 64-78, January.
    14. Lars Jonung & Martin Larch, 2006. "Improving fiscal policy in the EU: the case for independent forecasts," Economic Policy, CEPR;CES;MSH, vol. 21(47), pages 491-534, July.
    15. Bouthevillain, C. & Van Den Dool, G. & Langenus, G. & Mohr, M. & Momigliano, S. & Tujula, M. & De Cos, P.H. & Cour-Thimann, Philippine, 2001. "Cyclically Adjusted Budget Balances: an Alternative Approach," Papers 77, Quebec a Montreal - Recherche en gestion.
    16. Eric M. Engen & R. Glenn Hubbard, 2005. "Federal Government Debt and Interest Rates," NBER Chapters,in: NBER Macroeconomics Annual 2004, Volume 19, pages 83-160 National Bureau of Economic Research, Inc.
    17. George Kopits, 2001. "Fiscal Rules; Useful Policy Framework or Unnecessary Ornament?," IMF Working Papers 01/145, International Monetary Fund.
    18. Stéphanie Guichard & Mike Kennedy & Eckhard Wurzel & Christophe André, 2007. "What Promotes Fiscal Consolidation: OECD Country Experiences," OECD Economics Department Working Papers 553, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bos, Frits & Teulings, Coen, 2011. "Evaluating election platforms: a task for fiscal councils? Scope and rules of the game in view of 25 years of Dutch practice," MPRA Paper 31536, University Library of Munich, Germany.
    2. Douglas Sutherland & Peter Hoeller & Rossana Merola, 2012. "Fiscal Consolidation: Part 1. How Much is Needed and How to Reduce Debt to a Prudent Level?," OECD Economics Department Working Papers 932, OECD Publishing.
    3. Ferré, Montserrat, 2012. "The effects of uncertainty about countries’ compliance with the Stability and Growth Pact," Journal of Policy Modeling, Elsevier, vol. 34(5), pages 660-674.
    4. Daniele Franco (editor), 2012. "Rules and institutions for sound fiscal policy after the crisis," Workshop and Conferences 11, Bank of Italy, Economic Research and International Relations Area.
    5. Ryta Dziemianowicz, 2014. "Independent Fiscal Institutions As A Tool Of Fiscal Governance," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 9(1), pages 59-70, March.
    6. Kaplanoglou, Georgia & Rapanos, Vassilis T., 2011. "The Greek fiscal crisis and the role of fiscal governance," LSE Research Online Documents on Economics 36432, London School of Economics and Political Science, LSE Library.
    7. Ondra Kamenik & Zdenek Tuma & David Vavra & Zuzana Smidova, 2013. "A Simple Fiscal Stress Testing Model: Case Studies of Austrian, Czech and German Economies," OECD Economics Department Working Papers 1074, OECD Publishing.
    8. Xavier Debrun, 2011. "Democratic Accountability, Deficit Bias, and Independent Fiscal Agencies," IMF Working Papers 11/173, International Monetary Fund.
    9. Randall S. Jones & Kohei Fukawa, 2015. "Achieving Fiscal Consolidation while Promoting Social Cohesion in Japan," OECD Economics Department Working Papers 1262, OECD Publishing.
    10. Douglas Sutherland & Peter Hoeller & Rossana Merola, 2012. "Fiscal Consolidation: How Much, How Fast and by What Means?," OECD Economic Policy Papers 1, OECD Publishing.

    More about this item

    Keywords

    conseil budgétaires; fiscal councils; fiscal frameworks; fiscal policy; institution budgétaire; politique budgétaire;

    JEL classification:

    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oec:ecoaaa:829-en. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/edoecfr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.