Abstract
We assess the effect of fiscal rules on a new time-varying measure of fiscal counter-cyclicality computed for 60 countries over the period 1980–2014. First, we find that fiscal counter-cyclicality is positive and has been increasing over time, being larger in advanced economies. Second, we find that fiscal rules reduce the degree of fiscal counter-cyclicality. The result is especially strong for debt-based rules in advanced economies. Some design features hinder the degree of fiscal counter-cyclicality (such as escape clauses or enforcement procedures), while others (such as transparency) foster it.
Original language | English |
---|---|
Pages (from-to) | 159-162 |
Number of pages | 4 |
Journal | Economics Letters |
Volume | 170 |
DOIs | |
Publication status | Published - 1 Sep 2018 |
Keywords
- Filtering
- Fiscal rules
- Fiscal stabilization
- Government size
- Time-varying coefficients
- Weighted least squares