Expenditure Rules: Effective Tools for Sound Fiscal Policy?

30 Pages Posted: 7 Mar 2015

See all articles by Till Cordes

Till Cordes

Hertie School of Governance

Tidiane Kinda

International Monetary Fund (IMF)

Priscilla Muthoora

International Monetary Fund (IMF)

Anke Weber

International Monetary Fund (IMF)

Date Written: February 2015

Abstract

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

Cordes, Till and Kinda, Tidiane and Muthoora, Priscilla and Weber, Anke, Expenditure Rules: Effective Tools for Sound Fiscal Policy? (February 2015). IMF Working Paper No. 15/29, Available at SSRN: https://ssrn.com/abstract=2574702

Till Cordes (Contact Author)

Hertie School of Governance ( email )

Schlossplatz 1
Berlin, 10178
Germany

Tidiane Kinda

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Priscilla Muthoora

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Anke Weber

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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