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Independent Fiscal Councils: Recent Trends and Performance

Author: Mr.Roel M. W. J. Beetsma

Publisher: International Monetary Fund

Published: 2018-03-23

Total Pages: 28

ISBN-13: 1484348281

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Countries increasingly rely on independent fiscal councils to constrain policymakers’ discretion and curb the bias towards excessive deficits and pro-cyclical policies. Since fiscal councils are often recent and heterogeneous across countries, assessing their impact is challenging. Using the latest (2016) vintage of the IMF Fiscal Council Dataset, we focus on two tasks expected to strengthen fiscal performance: the preparation or assessment of forecasts, and the monitoring of compliance with fiscal rules. Tentative econometric evidence suggests that the presence of a fiscal council is associated with more accurate and less optimistic fiscal forecasts, as well as greater compliance with fiscal rules.

Book Synopsis Independent Fiscal Councils: Recent Trends and Performance by : Mr.Roel M. W. J. Beetsma

Download or read book Independent Fiscal Councils: Recent Trends and Performance written by Mr.Roel M. W. J. Beetsma and published by International Monetary Fund. This book was released on 2018-03-23 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: Countries increasingly rely on independent fiscal councils to constrain policymakers’ discretion and curb the bias towards excessive deficits and pro-cyclical policies. Since fiscal councils are often recent and heterogeneous across countries, assessing their impact is challenging. Using the latest (2016) vintage of the IMF Fiscal Council Dataset, we focus on two tasks expected to strengthen fiscal performance: the preparation or assessment of forecasts, and the monitoring of compliance with fiscal rules. Tentative econometric evidence suggests that the presence of a fiscal council is associated with more accurate and less optimistic fiscal forecasts, as well as greater compliance with fiscal rules.

Fiscal Councils

Author: Mr.Roel M. W. J. Beetsma

Publisher: International Monetary Fund

Published: 2016-04-08

Total Pages: 26

ISBN-13: 1484322908

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The paper discusses the effectiveness of independent fiscal institutions—or fiscal councils—in taming the deficit bias that emerged in the 1970s. After a review of the main theoretical arguments and recent trends about fiscal councils, we develop a stylized model showing how a fiscal council can effectively mitigate the deficit bias even though it has no direct lever on the conduct of fiscal policy. We show that the capacity of the fiscal council to improve the public’s understanding of the quality of fiscal policy contributes to better align voters and policymakers’ incentives and to tame the deficit bias affecting well-intended governments. After mapping the model’s key features into a broad set of criteria likely to contribute to the effectiveness of a fiscal council, we use the 2014 vintage of the IMF dataset on independent fiscal institutions to assess whether existing institutions have been built to work.

Book Synopsis Fiscal Councils by : Mr.Roel M. W. J. Beetsma

Download or read book Fiscal Councils written by Mr.Roel M. W. J. Beetsma and published by International Monetary Fund. This book was released on 2016-04-08 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper discusses the effectiveness of independent fiscal institutions—or fiscal councils—in taming the deficit bias that emerged in the 1970s. After a review of the main theoretical arguments and recent trends about fiscal councils, we develop a stylized model showing how a fiscal council can effectively mitigate the deficit bias even though it has no direct lever on the conduct of fiscal policy. We show that the capacity of the fiscal council to improve the public’s understanding of the quality of fiscal policy contributes to better align voters and policymakers’ incentives and to tame the deficit bias affecting well-intended governments. After mapping the model’s key features into a broad set of criteria likely to contribute to the effectiveness of a fiscal council, we use the 2014 vintage of the IMF dataset on independent fiscal institutions to assess whether existing institutions have been built to work.

The Functions and Impact of Fiscal Councils

Author: International Monetary Fund

Publisher: International Monetary Fund

Published: 2013-07-16

Total Pages: 63

ISBN-13: 1498341497

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In recent years, a rapidly growing number of countries have established independent agencies aimed at promoting sound fiscal policies. Although these institutions vary greatly in terms of their remit, tasks, and institutional forms, they tend to share an explicit mandate enshrined in legislation, a “watchdog” role implying a direct contribution to the public debate on fiscal policy, and strict non-partisanship in their activities. Importantly, fiscal councils do not have the discretion to set policy instruments. Unlike independent central banks in the monetary policy area, they are only facilitators of sound fiscal public finances, not decision makers deliberately insulated from politics. Earlier IMF staff analysis of non-partisan fiscal agencies (IMF, 2005, expanded by Debrun, Hauner and Kumar, 2009) referred to the generic term of “fiscal council” to designate these institutions. A handful of similar bodies have been in place for a long time—mostly in advanced economies.

Book Synopsis The Functions and Impact of Fiscal Councils by : International Monetary Fund

Download or read book The Functions and Impact of Fiscal Councils written by International Monetary Fund and published by International Monetary Fund. This book was released on 2013-07-16 with total page 63 pages. Available in PDF, EPUB and Kindle. Book excerpt: In recent years, a rapidly growing number of countries have established independent agencies aimed at promoting sound fiscal policies. Although these institutions vary greatly in terms of their remit, tasks, and institutional forms, they tend to share an explicit mandate enshrined in legislation, a “watchdog” role implying a direct contribution to the public debate on fiscal policy, and strict non-partisanship in their activities. Importantly, fiscal councils do not have the discretion to set policy instruments. Unlike independent central banks in the monetary policy area, they are only facilitators of sound fiscal public finances, not decision makers deliberately insulated from politics. Earlier IMF staff analysis of non-partisan fiscal agencies (IMF, 2005, expanded by Debrun, Hauner and Kumar, 2009) referred to the generic term of “fiscal council” to designate these institutions. A handful of similar bodies have been in place for a long time—mostly in advanced economies.

The Political Economy of Fiscal Transparency and Independent Fiscal Councils

Author: Mr.Roel M. W. J. Beetsma

Publisher: International Monetary Fund

Published: 2017-09-01

Total Pages: 48

ISBN-13: 1484318390

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The global surge in independent fiscal councils (IFCs) raises three related questions: How can IFCs improve the conduct of fiscal policy? Are they simultaneously desirable for voters and elected policymakers? And are they resilient to changes in political conditions? We build a model in which voters cannot observe the true competence of elected policymakers. IFCs’ role is to mitigate this imperfection. Equilibrium public debt is excessive because policymakers are “partisan” and “opportunistic.” If voters only care about policymakers’ competence, both the incumbent and the voters would be better off with an IFC as the debt bias would shrink. However, when other considerations eclipse competence and give the incumbent a strong electoral advantage or disadvantage, setting up an IFC may be counterproductive as the debt bias would increase. If the incumbent holds a moderate electoral advantage or disadvantage, voters would prefer an IFC, but an incumbent with a large advantage may prefer not to have an IFC. The main policy implications are that (i) establishing an IFC can only lower the debt bias if voters care sufficiently about policymakers’ competence; (ii) not all political environments are conducive to the emergence of IFCs; and (iii) IFCs are consequently vulnerable to shifts in political conditions.

Book Synopsis The Political Economy of Fiscal Transparency and Independent Fiscal Councils by : Mr.Roel M. W. J. Beetsma

Download or read book The Political Economy of Fiscal Transparency and Independent Fiscal Councils written by Mr.Roel M. W. J. Beetsma and published by International Monetary Fund. This book was released on 2017-09-01 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: The global surge in independent fiscal councils (IFCs) raises three related questions: How can IFCs improve the conduct of fiscal policy? Are they simultaneously desirable for voters and elected policymakers? And are they resilient to changes in political conditions? We build a model in which voters cannot observe the true competence of elected policymakers. IFCs’ role is to mitigate this imperfection. Equilibrium public debt is excessive because policymakers are “partisan” and “opportunistic.” If voters only care about policymakers’ competence, both the incumbent and the voters would be better off with an IFC as the debt bias would shrink. However, when other considerations eclipse competence and give the incumbent a strong electoral advantage or disadvantage, setting up an IFC may be counterproductive as the debt bias would increase. If the incumbent holds a moderate electoral advantage or disadvantage, voters would prefer an IFC, but an incumbent with a large advantage may prefer not to have an IFC. The main policy implications are that (i) establishing an IFC can only lower the debt bias if voters care sufficiently about policymakers’ competence; (ii) not all political environments are conducive to the emergence of IFCs; and (iii) IFCs are consequently vulnerable to shifts in political conditions.

Independent Fiscal Councils

Author: Roel M. W. J. Beetsma

Publisher:

Published: 2018

Total Pages: 25

ISBN-13:

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"Countries increasingly rely on independent fiscal councils to constrain policymakers' discretion and curb the bias towards excessive deficits and pro-cyclical policies. Since fiscal councils are often recent and heterogeneous across countries, assessing their impact is challenging. Using the latest (2016) vintage of the IMF Fiscal Council Dataset, we focus on two tasks expected to strengthen fiscal performance: the preparation or assessment of forecasts, and the monitoring of compliance with fiscal rules. Tentative econometric evidence suggests that the presence of a fiscal council is associated with more accurate and possibly less optimistic fiscal forecasts, as well as greater compliance with fiscal rules."--Abstract.

Book Synopsis Independent Fiscal Councils by : Roel M. W. J. Beetsma

Download or read book Independent Fiscal Councils written by Roel M. W. J. Beetsma and published by . This book was released on 2018 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Countries increasingly rely on independent fiscal councils to constrain policymakers' discretion and curb the bias towards excessive deficits and pro-cyclical policies. Since fiscal councils are often recent and heterogeneous across countries, assessing their impact is challenging. Using the latest (2016) vintage of the IMF Fiscal Council Dataset, we focus on two tasks expected to strengthen fiscal performance: the preparation or assessment of forecasts, and the monitoring of compliance with fiscal rules. Tentative econometric evidence suggests that the presence of a fiscal council is associated with more accurate and possibly less optimistic fiscal forecasts, as well as greater compliance with fiscal rules."--Abstract.

Strengthening Post-Crisis Fiscal Credibility

Author: Mr.Xavier Debrun

Publisher: International Monetary Fund

Published: 2014-04-08

Total Pages: 35

ISBN-13: 147552515X

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Institutions aimed at constraining policy discretion to promote sound fiscal policies are once again at the forefront of the policy debate. Interest in “fiscal councils,” independent watchdogs active in the public debate, has grown rapidly in recent years. This paper presents the first cross-country dataset summarizing key characteristics of fiscal councils among IMF members. The data documents a surge in the number of fiscal councils since the crisis. It also illustrates that well-designed fiscal councils are associated with stronger fiscal performance and better macroeconomic and budgetary forecasts. Key features of effective fiscal councils include operational independence from politics, the provision or public assessment of budgetary forecasts, a strong presence in the public debate, and the monitoring of compliance with fiscal policy rules.

Book Synopsis Strengthening Post-Crisis Fiscal Credibility by : Mr.Xavier Debrun

Download or read book Strengthening Post-Crisis Fiscal Credibility written by Mr.Xavier Debrun and published by International Monetary Fund. This book was released on 2014-04-08 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: Institutions aimed at constraining policy discretion to promote sound fiscal policies are once again at the forefront of the policy debate. Interest in “fiscal councils,” independent watchdogs active in the public debate, has grown rapidly in recent years. This paper presents the first cross-country dataset summarizing key characteristics of fiscal councils among IMF members. The data documents a surge in the number of fiscal councils since the crisis. It also illustrates that well-designed fiscal councils are associated with stronger fiscal performance and better macroeconomic and budgetary forecasts. Key features of effective fiscal councils include operational independence from politics, the provision or public assessment of budgetary forecasts, a strong presence in the public debate, and the monitoring of compliance with fiscal policy rules.

Case Studies of Fiscal Councils - Functions and Impact

Author: International Monetary Fund

Publisher: International Monetary Fund

Published: 2013-07-16

Total Pages: 54

ISBN-13: 1498341470

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This supplement presents case studies of seven fiscal councils and examines how each council performs its core functions and if and how it impacts on the fiscal policy debate. The seven fiscal councils are: Belgium (Conseil Supérieur des Finances—HCF), Canada (Parliamentary Budget Officer—PBO), Hungary (Költségvetési Tanács), Korea (National Assembly Budget Office—NABO), the Netherlands (Centraal Planbureau—CPB), Sweden (Finanspolitiska rådet), and the United States (Congressional Budget Office-CBO). The main paper presents the comparative lessons and the general findings of this study based on a systematic comparison of these fiscal councils’ experiences. This supplement discusses in detail each individual fiscal council’s experiences.

Book Synopsis Case Studies of Fiscal Councils - Functions and Impact by : International Monetary Fund

Download or read book Case Studies of Fiscal Councils - Functions and Impact written by International Monetary Fund and published by International Monetary Fund. This book was released on 2013-07-16 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: This supplement presents case studies of seven fiscal councils and examines how each council performs its core functions and if and how it impacts on the fiscal policy debate. The seven fiscal councils are: Belgium (Conseil Supérieur des Finances—HCF), Canada (Parliamentary Budget Officer—PBO), Hungary (Költségvetési Tanács), Korea (National Assembly Budget Office—NABO), the Netherlands (Centraal Planbureau—CPB), Sweden (Finanspolitiska rådet), and the United States (Congressional Budget Office-CBO). The main paper presents the comparative lessons and the general findings of this study based on a systematic comparison of these fiscal councils’ experiences. This supplement discusses in detail each individual fiscal council’s experiences.

Restoring Public Debt Sustainability

Author: George Kopits

Publisher:

Published: 2013-10

Total Pages: 300

ISBN-13: 0199644470

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A comprehensive survey of a new generation of independent fiscal institutions, established to promote transparency in public finances. The chapters, written by heads of the institutions, as well as distinguished policy analysts and academics, explore the rationale and experience of these fiscal watchdogs.

Book Synopsis Restoring Public Debt Sustainability by : George Kopits

Download or read book Restoring Public Debt Sustainability written by George Kopits and published by . This book was released on 2013-10 with total page 300 pages. Available in PDF, EPUB and Kindle. Book excerpt: A comprehensive survey of a new generation of independent fiscal institutions, established to promote transparency in public finances. The chapters, written by heads of the institutions, as well as distinguished policy analysts and academics, explore the rationale and experience of these fiscal watchdogs.

Fiscal Rules and Fiscal Councils: Recent Trends and Performance During the COVID-19 Pandemic

Author: Mr. Hamid R Davoodi

Publisher: International Monetary Fund

Published: 2022-01-27

Total Pages: 41

ISBN-13:

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Adoption of fiscal rules and fiscal councils continued to increase globally over the last decades based on two new global datasets. During the pandemic, fiscal frameworks were put to test. The widespread use of escape clauses was one of the novelties in this crisis, which helped provide policy room to respond to the health crisis. But the unprecedented fiscal actions have led to large and widespread deviations from deficit and debt limits. The evidence shows that fiscal rules, in general, have been flexible during crises but have not prevented a large and persistent buildup of debt over time. Experience shows that deviations from debt limits are very difficult to reverse. The paper also presents evidence on the benefits of a good track record in abiding by the rules. All these highlight the difficult policy choices ahead and need to further improve rules-based fiscal frameworks.

Book Synopsis Fiscal Rules and Fiscal Councils: Recent Trends and Performance During the COVID-19 Pandemic by : Mr. Hamid R Davoodi

Download or read book Fiscal Rules and Fiscal Councils: Recent Trends and Performance During the COVID-19 Pandemic written by Mr. Hamid R Davoodi and published by International Monetary Fund. This book was released on 2022-01-27 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: Adoption of fiscal rules and fiscal councils continued to increase globally over the last decades based on two new global datasets. During the pandemic, fiscal frameworks were put to test. The widespread use of escape clauses was one of the novelties in this crisis, which helped provide policy room to respond to the health crisis. But the unprecedented fiscal actions have led to large and widespread deviations from deficit and debt limits. The evidence shows that fiscal rules, in general, have been flexible during crises but have not prevented a large and persistent buildup of debt over time. Experience shows that deviations from debt limits are very difficult to reverse. The paper also presents evidence on the benefits of a good track record in abiding by the rules. All these highlight the difficult policy choices ahead and need to further improve rules-based fiscal frameworks.

Do Fiscal Councils Impact Fiscal Performance?

Author: Giovanni Coletta

Publisher:

Published: 2015

Total Pages: 35

ISBN-13:

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The lack of budget transparency and projections accuracy have been among the determinants of the last four decades high deficit and debt, as the recent 2008-2009 economic crisis has highlighted. In order to improve fiscal policy process and budget transparency, the European Union (EU) stated more stringent fiscal rules monitored by Independent Fiscal Bodies, that have the capacity to “tie the hands” of policymakers tempted by deviations from socially optimal choices according to the academic circles.The present paper aims at empirically verifying if Fiscal Councils (FCs) in Europe (as a complement or substitute for the Fiscal Rules - FRs) have an impact on Governments' fiscal decisions and if this impact exists and is positive which feature of their functioning is relevant for their effectiveness.The data elaborated with a panel regression model are the actual and foreseen (one year ahead) public finance and economic data of eleven European Countries1. The yearly planned change of the Cyclically Adjusted Budget Balance (CAB) 2 is interpreted as the discretionary fiscal policy and data about FCs and FRs are those of the European Commission (EC) Database on Fiscal Governance (data on fiscal institutions of the European database were opportunely adjusted, controlled and rebuilt for the missing years to construct the Fiscal Council Index - FCI).This work (with the caveats related to the used data) provides empirical support for the hypothesis of a positive impact of FCs on fiscal performance; leading to the conclusion that if there are clear and strong FRs, the presence of fiscal institutions with solid basis in national institutional framework (strong legal basis) could positively affect political decisions.

Book Synopsis Do Fiscal Councils Impact Fiscal Performance? by : Giovanni Coletta

Download or read book Do Fiscal Councils Impact Fiscal Performance? written by Giovanni Coletta and published by . This book was released on 2015 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: The lack of budget transparency and projections accuracy have been among the determinants of the last four decades high deficit and debt, as the recent 2008-2009 economic crisis has highlighted. In order to improve fiscal policy process and budget transparency, the European Union (EU) stated more stringent fiscal rules monitored by Independent Fiscal Bodies, that have the capacity to “tie the hands” of policymakers tempted by deviations from socially optimal choices according to the academic circles.The present paper aims at empirically verifying if Fiscal Councils (FCs) in Europe (as a complement or substitute for the Fiscal Rules - FRs) have an impact on Governments' fiscal decisions and if this impact exists and is positive which feature of their functioning is relevant for their effectiveness.The data elaborated with a panel regression model are the actual and foreseen (one year ahead) public finance and economic data of eleven European Countries1. The yearly planned change of the Cyclically Adjusted Budget Balance (CAB) 2 is interpreted as the discretionary fiscal policy and data about FCs and FRs are those of the European Commission (EC) Database on Fiscal Governance (data on fiscal institutions of the European database were opportunely adjusted, controlled and rebuilt for the missing years to construct the Fiscal Council Index - FCI).This work (with the caveats related to the used data) provides empirical support for the hypothesis of a positive impact of FCs on fiscal performance; leading to the conclusion that if there are clear and strong FRs, the presence of fiscal institutions with solid basis in national institutional framework (strong legal basis) could positively affect political decisions.