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The Effects of Fiscal Institutions on Public Finance: A Survey of the Empirical Evidence
Gebhard Kirchgässner Universität St. Gallen; CESifo (Center for Economic Studies and Ifo Institute for Economic Research) December 2001 CESifo Working Paper Series No. 617; University of St. Gallen Discussion Paper No. 2001-15 Abstract: This paper surveys the empirical research on fiscal institutions of the last three decades. The main results are: (i) Constitutional or statutory fiscal limitations have in most cases proved to be effective in cutting down public expenditure, revenue, and debt. (ii) Budgetary procedures matter as well. They might be less effective than constitutional or statutory rules, but in a situation where it is impossible to introduce such rules they might present a feasible second-best way to reach fiscal sustainability. (iii) Citizens demand fewer public services and a sounder fiscal policy in systems with direct legislation than in purely parliamentary systems. (iv) There is some evidence that fiscal federalism leads "ceteris paribus" to a smaller size of the government. There are also political institutions which have an impact on the public budgets, and there are some interactions between the different institutions.
Keywords: Balanced Budget, Budgetary Procedures, Fiscal Federalism, Direct Democracy, Public Expenditure, Public Debt JEL Classifications: H61, H71 Working Paper SeriesDate posted: December 06, 2001 ; Last revised: September 01, 2004Suggested CitationContact Information
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