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What should fiscal councils do?

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  • Simon Wren-Lewis
  • Lars Calmfors

Abstract

Fiscal councils now exist in a number of countries. This paper first considers the extent of deficit bias, potential explanations for it, and how independent institutions could help reduce it. Are fiscal councils complements to or substitutes for fiscal rules, and why do none at present have any formal control over fiscal decisions? The paper then outlines the specific tasks that a fiscal council might undertake, and examines how these are combined in eleven fiscal councils. A more detailed examination is undertaken of the fiscal councils in Sweden and the UK. The paper draws some conclusions on the role of fiscal forecasting, ensuring independence, and the provision of policy advice.

Suggested Citation

  • Simon Wren-Lewis & Lars Calmfors, 2011. "What should fiscal councils do?," Economics Series Working Papers 537, University of Oxford, Department of Economics.
    • Handle: RePEc:oxf:wpaper:537
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    References listed on IDEAS

    as
    1. Schmitt-Grohe, Stephanie & Uribe, Martin, 2004. "Optimal fiscal and monetary policy under sticky prices," Journal of Economic Theory, Elsevier, vol. 114(2), pages 198-230, February.
    2. von Hagen, Jurgen & Harden, Ian J., 1995. "Budget processes and commitment to fiscal discipline," European Economic Review, Elsevier, vol. 39(3-4), pages 771-779, April.
    3. Leith, Campbell & Wren-Lewis, Simon, 2006. "Compatibility between monetary and fiscal policy under EMU," European Economic Review, Elsevier, vol. 50(6), pages 1529-1556, August.
    4. Simon Wren-Lewis, 2011. "Comparing the delegation of monetary and fiscal policy," Economics Series Working Papers 540, University of Oxford, Department of Economics.
    5. Simon Wren-Lewis, 2010. "Macroeconomic policy in light of the credit crunch: the return of counter-cyclical fiscal policy?," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 26(1), pages 71-86, Spring.
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    More about this item

    Keywords

    Fiscal policy; Debt; Deficit bias; Fiscal council;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes

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