Democratic Accountability, Deficit Bias, and Independent Fiscal Agencies

16 Pages Posted: 1 Aug 2011

See all articles by Xavier Debrun

Xavier Debrun

International Monetary Fund (IMF) - Research Department

Date Written: July 2011

Abstract

Despite growing interest among policymakers, there is no theory of independent fiscal institutions. The emerging literature on "fiscal councils" typically makes informal parallels with the theory of central bank independence, but a very simple formal example shows that such a shortcut is flawed. The paper then illustrates key features of a model of independent fiscal agencies, and in particular the need (1) to incorporate the intrinsically political nature of fiscal policy - which precludes credible delegation of instruments to unelected decisionmakers - and (2) to focus on characterizing "commitment technologies" likely to credibly increase fiscal discipline.

Suggested Citation

Debrun, Xavier, Democratic Accountability, Deficit Bias, and Independent Fiscal Agencies (July 2011). IMF Working Paper No. 11/173, Available at SSRN: https://ssrn.com/abstract=1899574

Xavier Debrun (Contact Author)

International Monetary Fund (IMF) - Research Department ( email )

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