The Effects of Fiscal Institutions on Public Finance: A Survey of the Empirical Evidence

32 Pages Posted: 6 Dec 2001

See all articles by Gebhard Kirchgässner

Gebhard Kirchgässner

Universität St. Gallen; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: December 2001

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 Classification: H61, H71

Suggested Citation

Kirchgaessner, Gebhard, The Effects of Fiscal Institutions on Public Finance: A Survey of the Empirical Evidence (December 2001). Available at SSRN: https://ssrn.com/abstract=292219

Gebhard Kirchgaessner (Contact Author)

Universität St. Gallen ( email )

SIAW, Bodanstrasse 8
CH-9000 St.Gallen
Switzerland
+41 71 224 23 47 (Phone)
+41 71 224 22 98 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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