What Should Fiscal Councils Do?

52 Pages Posted: 29 Mar 2011

See all articles by Lars Calmfors

Lars Calmfors

Research Institute of Industrial Economics; IIES

Simon Wren-Lewis

University of Oxford - Economics Department

Multiple version iconThere are 2 versions of this paper

Date Written: March 24, 2011

Abstract

The paper analyses theoretically what role fiscal councils could play and surveys empirically the activities of existing councils. Case studies of the Swedish Fiscal Policy Council and the UK Office for Budget Responsibility are done. It is concluded that fiscal councils should be advisory, rather than decision-making, and work as complements, rather than substitutes, to fiscal rules. A key issue is the political fragility of fiscal councils and how their long-run viability should be secured. Three ways of guaranteeing their independence are suggested: (1) reputation-building; (2)formal national rules; and (3) international monitoring.

Keywords: deficit bias, fiscal rules, fiscal councils

JEL Classification: H600

Suggested Citation

Calmfors, Lars and Wren-Lewis, Simon J.Q., What Should Fiscal Councils Do? (March 24, 2011). CESifo Working Paper Series No. 3382, Available at SSRN: https://ssrn.com/abstract=1793703

Lars Calmfors (Contact Author)

Research Institute of Industrial Economics ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden
+46761355814 (Phone)

IIES ( email )

Stockholm, SE-10691
Sweden
+468163076 (Phone)

Simon J.Q. Wren-Lewis

University of Oxford - Economics Department ( email )

Manor Road Building
Manor Road
Oxford, OX1 3BJ
United Kingdom

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