Do Subnational Fiscal Rules Foster Fiscal Discipline? New Empirical Evidence from Europe

Do Subnational Fiscal Rules Foster Fiscal Discipline? New Empirical Evidence from Europe

Author: Ananya Kotia

Publisher: International Monetary Fund

Published: 2016-04-07

Total Pages: 37

ISBN-13: 1484322037

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This paper studies how fiscal rules interact with the intergovernmental fiscal framework to foster fiscal discipline among European subnational governments. We use political variables describing the fiscal attitudes of the central government as instruments to obtain consistent estimates of the impact of subnational fiscal rules on fiscal balances. The results suggest that the discipline-enhancing effect of fiscal rules is weaker when there are large “vertical fiscal imbalances” that is, large differences in revenue and spending assignments across the different levels of government. These findings imply that separate reforms to reduce excessive vertical fiscal imbalances complement a rules-based fiscal framework that is aimed at fostering fiscal discipline.


Book Synopsis Do Subnational Fiscal Rules Foster Fiscal Discipline? New Empirical Evidence from Europe by : Ananya Kotia

Download or read book Do Subnational Fiscal Rules Foster Fiscal Discipline? New Empirical Evidence from Europe written by Ananya Kotia and published by International Monetary Fund. This book was released on 2016-04-07 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies how fiscal rules interact with the intergovernmental fiscal framework to foster fiscal discipline among European subnational governments. We use political variables describing the fiscal attitudes of the central government as instruments to obtain consistent estimates of the impact of subnational fiscal rules on fiscal balances. The results suggest that the discipline-enhancing effect of fiscal rules is weaker when there are large “vertical fiscal imbalances” that is, large differences in revenue and spending assignments across the different levels of government. These findings imply that separate reforms to reduce excessive vertical fiscal imbalances complement a rules-based fiscal framework that is aimed at fostering fiscal discipline.

Do Subnational Fiscal Rules Foster Fiscal Discipline? New Empirical Evidence from Europe

Do Subnational Fiscal Rules Foster Fiscal Discipline? New Empirical Evidence from Europe

Author: Ananya Kotia

Publisher: International Monetary Fund

Published: 2016-04-12

Total Pages: 37

ISBN-13: 1484328175

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This paper studies how fiscal rules interact with the intergovernmental fiscal framework to foster fiscal discipline among European subnational governments. We use political variables describing the fiscal attitudes of the central government as instruments to obtain consistent estimates of the impact of subnational fiscal rules on fiscal balances. The results suggest that the discipline-enhancing effect of fiscal rules is weaker when there are large “vertical fiscal imbalances” that is, large differences in revenue and spending assignments across the different levels of government. These findings imply that separate reforms to reduce excessive vertical fiscal imbalances complement a rules-based fiscal framework that is aimed at fostering fiscal discipline.


Book Synopsis Do Subnational Fiscal Rules Foster Fiscal Discipline? New Empirical Evidence from Europe by : Ananya Kotia

Download or read book Do Subnational Fiscal Rules Foster Fiscal Discipline? New Empirical Evidence from Europe written by Ananya Kotia and published by International Monetary Fund. This book was released on 2016-04-12 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies how fiscal rules interact with the intergovernmental fiscal framework to foster fiscal discipline among European subnational governments. We use political variables describing the fiscal attitudes of the central government as instruments to obtain consistent estimates of the impact of subnational fiscal rules on fiscal balances. The results suggest that the discipline-enhancing effect of fiscal rules is weaker when there are large “vertical fiscal imbalances” that is, large differences in revenue and spending assignments across the different levels of government. These findings imply that separate reforms to reduce excessive vertical fiscal imbalances complement a rules-based fiscal framework that is aimed at fostering fiscal discipline.

Designing a European Fiscal Union

Designing a European Fiscal Union

Author: Mr.Carlo Cottarelli

Publisher: International Monetary Fund

Published: 2014-12-05

Total Pages: 270

ISBN-13: 1138783226

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Does the European Union need closer fiscal integration, and in particular a stronger fiscal centre, to become more resilient to economic shocks? This book looks at the experience of 13 federal states to help inform the heated debate on this issue. It analyses in detail their practices in devolving responsibilities from the subnational to the central level, compares them to those of the European Union, and draws lessons for a possible future fiscal union in Europe. More specifically, this book tries to answer three sets of questions: What is the role of centralized fiscal policies in federations, and hence the size, features and functions of the central budget? What institutional arrangements are used to coordinate fiscal policy between the federal and subnational levels? What are the links between federal and subnational debt, and how have subnational financing crises been handled, when they occurred? These policy questions are critical in many federations, and central to the current discussions about future paths for the European Union. This book brings to the table new, practical insights through a systematic and comprehensive comparison of the EU fiscal framework with that of federal states. It also departs from the decentralization perspective that has been prominent in the literature by focusing on the role of the centre (which responsibilities are centralized at the federal level and how they are handled, rather than which functions belong to the local level). Such an approach is particularly relevant for the European Union, where a fiscal union would imply granting new powers to the centre.


Book Synopsis Designing a European Fiscal Union by : Mr.Carlo Cottarelli

Download or read book Designing a European Fiscal Union written by Mr.Carlo Cottarelli and published by International Monetary Fund. This book was released on 2014-12-05 with total page 270 pages. Available in PDF, EPUB and Kindle. Book excerpt: Does the European Union need closer fiscal integration, and in particular a stronger fiscal centre, to become more resilient to economic shocks? This book looks at the experience of 13 federal states to help inform the heated debate on this issue. It analyses in detail their practices in devolving responsibilities from the subnational to the central level, compares them to those of the European Union, and draws lessons for a possible future fiscal union in Europe. More specifically, this book tries to answer three sets of questions: What is the role of centralized fiscal policies in federations, and hence the size, features and functions of the central budget? What institutional arrangements are used to coordinate fiscal policy between the federal and subnational levels? What are the links between federal and subnational debt, and how have subnational financing crises been handled, when they occurred? These policy questions are critical in many federations, and central to the current discussions about future paths for the European Union. This book brings to the table new, practical insights through a systematic and comprehensive comparison of the EU fiscal framework with that of federal states. It also departs from the decentralization perspective that has been prominent in the literature by focusing on the role of the centre (which responsibilities are centralized at the federal level and how they are handled, rather than which functions belong to the local level). Such an approach is particularly relevant for the European Union, where a fiscal union would imply granting new powers to the centre.

How to Design Subnational Fiscal Rules

How to Design Subnational Fiscal Rules

Author: Luc Eyraud

Publisher: International Monetary Fund

Published: 2020-02-25

Total Pages: 29

ISBN-13: 1513527037

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This note discusses how to design subnational fiscal rules, including how to select them and calibrate them. It expands on the guidance provided at the national level on rule selection and calibration in IMF (2018a) and IMF (2018b). Thinking on subnational fiscal rules is still evolving, including their effectiveness (for example, Heinemann, Moessinger, and Yeter 2018; Kotia and Lledó 2016; Foremny 2014), and this note only provides a first analysis based on international experiences and the technical assistance provided by the IMF. Main findings are summarized in Box 1. The note is divided into five sections. The first section defines fiscal rules. The second section discusses the rationale for subnational rules. The third section provides some guidance on how to select the appropriate rule(s) and whether they should differ across individual jurisdictions. The fourth section explores the issue of flexibility by looking at how rules should adjust to shocks. Finally, the last section focuses on the “calibration” of the rules.


Book Synopsis How to Design Subnational Fiscal Rules by : Luc Eyraud

Download or read book How to Design Subnational Fiscal Rules written by Luc Eyraud and published by International Monetary Fund. This book was released on 2020-02-25 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: This note discusses how to design subnational fiscal rules, including how to select them and calibrate them. It expands on the guidance provided at the national level on rule selection and calibration in IMF (2018a) and IMF (2018b). Thinking on subnational fiscal rules is still evolving, including their effectiveness (for example, Heinemann, Moessinger, and Yeter 2018; Kotia and Lledó 2016; Foremny 2014), and this note only provides a first analysis based on international experiences and the technical assistance provided by the IMF. Main findings are summarized in Box 1. The note is divided into five sections. The first section defines fiscal rules. The second section discusses the rationale for subnational rules. The third section provides some guidance on how to select the appropriate rule(s) and whether they should differ across individual jurisdictions. The fourth section explores the issue of flexibility by looking at how rules should adjust to shocks. Finally, the last section focuses on the “calibration” of the rules.

Local Public Finance

Local Public Finance

Author: René Geissler

Publisher: Springer Nature

Published: 2021-04-20

Total Pages: 354

ISBN-13: 3030674665

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This book is based upon a comparative public administration research project, initiated by the Hertie School of Governance (Germany) and the Bertelsmann Foundation (Germany) and supported by a network of researchers from many EU countries. It analyzes both the regimes and the practices of local fiscal regulation in 21 European countries. The book brings together key findings of this research project. The regulatory discussion is not limited to the prominent issue of fiscal rules but focuses on every component of regulation. Beyond this, the book covers affiliated topics such as the impact of regulation for local governments, evolution of regulation, administrative costs and crisis prevention. The various book chapters throughout provide a broad picture of local public finance regulation in theory and in practice, using different theoretical and national lenses for the analysis. Furthermore, the authors investigate the effects of budgetary constraints and higher-level regulatory efforts on local governments and on democracy and public services in every European country. This book fills a gap with respect to the lack of discussion on local government finance from an international, comparative perspective and, in particular, the regulation of local public finance. With its mix of authors, this book will be useful for practitioners as well as for scholars and for theory-driven research.


Book Synopsis Local Public Finance by : René Geissler

Download or read book Local Public Finance written by René Geissler and published by Springer Nature. This book was released on 2021-04-20 with total page 354 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is based upon a comparative public administration research project, initiated by the Hertie School of Governance (Germany) and the Bertelsmann Foundation (Germany) and supported by a network of researchers from many EU countries. It analyzes both the regimes and the practices of local fiscal regulation in 21 European countries. The book brings together key findings of this research project. The regulatory discussion is not limited to the prominent issue of fiscal rules but focuses on every component of regulation. Beyond this, the book covers affiliated topics such as the impact of regulation for local governments, evolution of regulation, administrative costs and crisis prevention. The various book chapters throughout provide a broad picture of local public finance regulation in theory and in practice, using different theoretical and national lenses for the analysis. Furthermore, the authors investigate the effects of budgetary constraints and higher-level regulatory efforts on local governments and on democracy and public services in every European country. This book fills a gap with respect to the lack of discussion on local government finance from an international, comparative perspective and, in particular, the regulation of local public finance. With its mix of authors, this book will be useful for practitioners as well as for scholars and for theory-driven research.

The Discipline-Enhancing Role of Fiscal Institutions

The Discipline-Enhancing Role of Fiscal Institutions

Author: Xavier Debrun

Publisher: International Monetary Fund

Published: 2007-07

Total Pages: 54

ISBN-13:

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This paper discusses the role of fiscal institutions, including budget rules and non-partisan agencies, in enhancing fiscal discipline. A dynamic model of fiscal policy shows that optimal institutions lack credibility unless the costs to bypass them are sufficiently high. In our model, a combination of complete budgetary transparency and strong democratic accountability suffice to establish credibility. Under incomplete budgetary transparency, accountable governments may also use institutions as a signal of competence to increase their reelection chances, which in turn erodes the penchant for excessive deficits. In light of the theory, empirical tests of the effectiveness of institutions are undertaken. The results further emphasize that analysis should pay due attention to simultaneity bias (because disciplined governments may be more likely to adopt strict institutions). Also, interactions among different fiscal institutions, and between the latter and key features of the political system need to be explored further.


Book Synopsis The Discipline-Enhancing Role of Fiscal Institutions by : Xavier Debrun

Download or read book The Discipline-Enhancing Role of Fiscal Institutions written by Xavier Debrun and published by International Monetary Fund. This book was released on 2007-07 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper discusses the role of fiscal institutions, including budget rules and non-partisan agencies, in enhancing fiscal discipline. A dynamic model of fiscal policy shows that optimal institutions lack credibility unless the costs to bypass them are sufficiently high. In our model, a combination of complete budgetary transparency and strong democratic accountability suffice to establish credibility. Under incomplete budgetary transparency, accountable governments may also use institutions as a signal of competence to increase their reelection chances, which in turn erodes the penchant for excessive deficits. In light of the theory, empirical tests of the effectiveness of institutions are undertaken. The results further emphasize that analysis should pay due attention to simultaneity bias (because disciplined governments may be more likely to adopt strict institutions). Also, interactions among different fiscal institutions, and between the latter and key features of the political system need to be explored further.

Local Governance in Spain

Local Governance in Spain

Author: Ángel Iglesias Alonso

Publisher: Springer Nature

Published: 2022-11-08

Total Pages: 290

ISBN-13: 3031148045

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The book addresses in detail local governance in Spain. In recent decades, local governments in Europe have increasingly found themselves under pressure from a multitude of new challenges, such as demographic change, climate change, fiscal austerity policies, digitization, the demand for more citizen participation in local affairs, and the migration crisis in some of them, to name just a few. Consequently, a wave of political and administrative reforms to address these challenges, pressures and problems, has changed local governance in many countries. In part, these changes were the result of reform policies introduced by national and state governments, often triggered by austerity policies, which has become an overwhelming reality for Spanish local governments that have been forced to introduce innovations in local governance. This book aims to give an account of these innovations in local governance in Spain. This book considers the local political-administrative structure in its dimensions, focusing on the analysis of its party system, electoral competition and political behavior in the local arena, as well as on local finances, all of which are determining elements in urban and rural governance processes. On the occasion of the recent crisis unleashed by Covid-19, the book will also deal with local governance in crisis situations. The book will also contextualize local governance processes in Spain in relation to the trends in local governance observed in other European countries.


Book Synopsis Local Governance in Spain by : Ángel Iglesias Alonso

Download or read book Local Governance in Spain written by Ángel Iglesias Alonso and published by Springer Nature. This book was released on 2022-11-08 with total page 290 pages. Available in PDF, EPUB and Kindle. Book excerpt: The book addresses in detail local governance in Spain. In recent decades, local governments in Europe have increasingly found themselves under pressure from a multitude of new challenges, such as demographic change, climate change, fiscal austerity policies, digitization, the demand for more citizen participation in local affairs, and the migration crisis in some of them, to name just a few. Consequently, a wave of political and administrative reforms to address these challenges, pressures and problems, has changed local governance in many countries. In part, these changes were the result of reform policies introduced by national and state governments, often triggered by austerity policies, which has become an overwhelming reality for Spanish local governments that have been forced to introduce innovations in local governance. This book aims to give an account of these innovations in local governance in Spain. This book considers the local political-administrative structure in its dimensions, focusing on the analysis of its party system, electoral competition and political behavior in the local arena, as well as on local finances, all of which are determining elements in urban and rural governance processes. On the occasion of the recent crisis unleashed by Covid-19, the book will also deal with local governance in crisis situations. The book will also contextualize local governance processes in Spain in relation to the trends in local governance observed in other European countries.

Research Handbook on City and Municipal Finance

Research Handbook on City and Municipal Finance

Author: Craig L. Johnson

Publisher: Edward Elgar Publishing

Published: 2023-09-06

Total Pages: 519

ISBN-13: 1800372965

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This timely Research Handbook explores the handling of city and municipal finances in the 21st century. It examines the impact of the Great Recession and COVID-19 pandemic on cities and municipalities, highlighting strengths, weaknesses, and avenues for future progress in city and municipal financial management.


Book Synopsis Research Handbook on City and Municipal Finance by : Craig L. Johnson

Download or read book Research Handbook on City and Municipal Finance written by Craig L. Johnson and published by Edward Elgar Publishing. This book was released on 2023-09-06 with total page 519 pages. Available in PDF, EPUB and Kindle. Book excerpt: This timely Research Handbook explores the handling of city and municipal finances in the 21st century. It examines the impact of the Great Recession and COVID-19 pandemic on cities and municipalities, highlighting strengths, weaknesses, and avenues for future progress in city and municipal financial management.

IMF Research Bulletin, June 2016

IMF Research Bulletin, June 2016

Author: International Monetary Fund. Research Dept.

Publisher: International Monetary Fund

Published: 2016-06-17

Total Pages: 9

ISBN-13: 1475529023

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In the June 2016 issue of IMF Research Bulletin, Eugenio Cerutti interviews Lars E.O. Svensson. Lars, a professor at the Stockholm School of Economics, was a Visiting Scholar at the IMF. In the interview, he discusses monetary policy, financial stability, and life at the IMF. The Bulletin also features a listing of recent Working Papers, Staff Discussion Notes, and key IMF publications. The table of contents from the latest issue of IMF Economic Review is also included.


Book Synopsis IMF Research Bulletin, June 2016 by : International Monetary Fund. Research Dept.

Download or read book IMF Research Bulletin, June 2016 written by International Monetary Fund. Research Dept. and published by International Monetary Fund. This book was released on 2016-06-17 with total page 9 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the June 2016 issue of IMF Research Bulletin, Eugenio Cerutti interviews Lars E.O. Svensson. Lars, a professor at the Stockholm School of Economics, was a Visiting Scholar at the IMF. In the interview, he discusses monetary policy, financial stability, and life at the IMF. The Bulletin also features a listing of recent Working Papers, Staff Discussion Notes, and key IMF publications. The table of contents from the latest issue of IMF Economic Review is also included.

Enforcement and the Stability and Growth Pact: How Fiscal Policy Did and Did Not Change Under Europe's Fiscal Framework

Enforcement and the Stability and Growth Pact: How Fiscal Policy Did and Did Not Change Under Europe's Fiscal Framework

Author: Anthony Annett

Publisher: International Monetary Fund

Published: 2006-05

Total Pages: 38

ISBN-13:

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The Stability and Growth Pact has been a success in numerous EU countries, especially in guiding them toward underlying fiscal balance ahead of population aging. These countries tend to be smaller, subject to greater macroeconomic volatility, and reliant on a form of fiscal governance that emphasizes targets and contracts. Most of the new members share these characteristics. For the countries less compatible with the Pact, domestic governance reforms that increase the reputational costs for noncompliance can be useful complements to the fiscal framework.


Book Synopsis Enforcement and the Stability and Growth Pact: How Fiscal Policy Did and Did Not Change Under Europe's Fiscal Framework by : Anthony Annett

Download or read book Enforcement and the Stability and Growth Pact: How Fiscal Policy Did and Did Not Change Under Europe's Fiscal Framework written by Anthony Annett and published by International Monetary Fund. This book was released on 2006-05 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Stability and Growth Pact has been a success in numerous EU countries, especially in guiding them toward underlying fiscal balance ahead of population aging. These countries tend to be smaller, subject to greater macroeconomic volatility, and reliant on a form of fiscal governance that emphasizes targets and contracts. Most of the new members share these characteristics. For the countries less compatible with the Pact, domestic governance reforms that increase the reputational costs for noncompliance can be useful complements to the fiscal framework.