Do Balanced Budget Laws Matter in Recessions?

19 Pages Posted: 2 Mar 2018

See all articles by Haizhen Mou

Haizhen Mou

Johnson-Shoyama Graduate School of Public Policy

Michael Atkinson

University of Saskatchewan - Johnson-Shoyama Graduate School of Public Policy

Stephen Tapp

Institute for Research on Public Policy

Date Written: Spring 2018

Abstract

Since the mid‐1990s, most Canadian provinces have enacted balanced budget laws (BBLs). Critics argue that these laws are empty political gestures that are ignored during economic slowdowns. We consider BBLs in the Canadian provinces from 1981 to 2013 and find that provinces with stronger rules had better deficit and debt records overall. Recessions make it more difficult to achieve positive outcomes, but we find no obvious difference between the effects of BBLs during normal economic conditions and “bad times.” We conclude with suggestions for how the design of BBLs could take better account of jurisdiction‐specific business cycles.

Suggested Citation

Mou, Haizhen and Atkinson, Michael and Tapp, Stephen, Do Balanced Budget Laws Matter in Recessions? (Spring 2018). Public Budgeting & Finance, Vol. 38, Issue 1, pp. 28-46, 2018. Available at SSRN: https://ssrn.com/abstract=3132804 or http://dx.doi.org/10.1111/pbaf.12163

Haizhen Mou (Contact Author)

Johnson-Shoyama Graduate School of Public Policy ( email )

College of Education
Saskatoon, Saskatchewan S7N 5A7
Canada

Michael Atkinson

University of Saskatchewan - Johnson-Shoyama Graduate School of Public Policy ( email )

Diefenbaker Building
101 Diefenbaker Place
Saskatoon, Saskatchewan S7N5B8
Canada

Stephen Tapp

Institute for Research on Public Policy ( email )

1470 Peel St. #200
Montreal, Quebec H3A 1T1
Canada

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