Do fiscal rules constrain political budget cycles? Bram Gootjes, Jakob de Haan & Richard Jong-A-Pin
By: Gootjes, Bram
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Contributor(s): Haan, Jakob de | Jong A Pin, Richard.
Material type: 
ArticlePublisher: 2021Subject(s): DERECHO TRIBUTARIO | POLITICA FISCAL | PRESUPUESTOS | ESTABILIDAD PRESUPUESTARIA
In:
Public Choice v. 188, n. 1-2, July 2021, p. 1-30Summary: We ask whether fiscal rules constrain incumbents from using fiscal policy tools for reelection purposes. Using data on fiscal rules provided by the IMF for a sample of 77 (advanced and developing) countries over the 1984–2015 period, we find that strong fiscal rules dampen political budget cycles. Our results are remarkably robust against inclusion of media freedom and the level of government debt as explanatory variables. Furthermore, we find a strong effect of fiscal rules in, amongst others, countries with fewer veto players, left-wing governments, established democracies, and more globalized economies. In addition, the effect of fiscal rules on political budget cycles seems to be stronger after the global financial crisis, reflecting post-crisis expansion in the number of countries with strong fiscal rules, notably in the European Union.
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| Artículos | IEF | IEF | OP 1443/2021/188/1/2-1 (Browse shelf) | Available | OP 1443/2021/188/1/2-1 |
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| OP 1443/2021/187/3/4-1 Does economic globalization affect government spending? | OP 1443/2021/187/3/4-2 Government ideology and fiscal consolidation | OP 1443/2021/188/1/2 Public Choice | OP 1443/2021/188/1/2-1 Do fiscal rules constrain political budget cycles? | OP 1443/2021/188/1/2-2 Public expenditures and the risk of social dominance | OP 1443/2021/188/3/4-1 Veto players, market discipline, and structural fiscal consolidations | OP 1443/2021/189/1/2 Public Choice |
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We ask whether fiscal rules constrain incumbents from using fiscal policy tools for reelection purposes. Using data on fiscal rules provided by the IMF for a sample of 77 (advanced and developing) countries over the 1984–2015 period, we find that strong fiscal rules dampen political budget cycles. Our results are remarkably robust against inclusion of media freedom and the level of government debt as explanatory variables. Furthermore, we find a strong effect of fiscal rules in, amongst others, countries with fewer veto players, left-wing governments, established democracies, and more globalized economies. In addition, the effect of fiscal rules on political budget cycles seems to be stronger after the global financial crisis, reflecting post-crisis expansion in the number of countries with strong fiscal rules, notably in the European Union.
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