Expenditure Rules: Effective Tools for Sound Fiscal Policy?
30 Pages Posted: 7 Mar 2015
Date Written: February 2015
This paper provides new evidence on the effectiveness of expenditure rules. The analysis is based on a unique dataset covering all countries with national and supranational fiscal rules, including 33 expenditure rules, between 1985 and 2013. It contributes to the existing literature on fiscal rules in two main ways. First, it is the most comprehensive assessment of compliance with rules and of the potential role of expenditure rules, in particular regarding long-term sustainability. Second, it analyzes whether expenditure rules are associated with changes in public investment and its efficiency.
Keywords: Expenditure effectiveness, Fiscal policy, Fiscal rules, Expenditure controls, Cross country analysis, Time series, Expenditure rules, Fiscal governance, Rules versus discretion, Stabilization, debt, budget, public investment, budget balance, medium-term expenditure frameworks, capital expenditure, fiscal performance, central government, fiscal institutions, fiscal targets, interest payments, appropriations, expenditures, fiscal policy rules, gross debt, expenditure target, fiscal policies, incentives, annual budget, public spending, budget envelope, public finances, operational decisions, financial crisis, capital spending, public expenditures, composition of public spending, economic stabil
JEL Classification: E62, H50
Suggested Citation: Suggested Citation