IDEAS home Printed from https://ideas.repec.org/a/fru/finjrn/190205p65-80.html
   My bibliography  Save this article

International Practice of Fiscal Rules: Formation of Modern Approaches

Author

Listed:
  • Samvel S. Lazaryan

    (Financial Research Institute, Moscow 127006, Russia)

  • Ivan V. Nikonov

    (Financial Research Institute, Moscow 127006, Russia)

  • Anton I. Votinov

    (Financial Research Institute, Moscow 127006, Russia)

  • Ekaterina A. Gubkova

    (Financial Research Institute, Moscow 127006, Russia)

Abstract

According to a range of theoretical studies, implementation of fiscal rules implying numerical limits on fiscal aggregates has some advantages over the discretionary measures. Thus, their use leads to the improvement in deficit management and to the increase of macroeconomic stability. Moreover, recent empirical studies on the effect of fiscal rules support the theory. Namely, their use has a positive influence on long-term economic growth and government finances. At the same time, actual experience with fiscal rules has not always been successful, therefore, the rules were exposed to frequent changes and improvements. The article discusses the evolution of the worldwide approaches to elaborate a system of fiscal rules. The main stages of their development are highlighted and the reasons for the observed modifications in fiscal rule framework are analyzed. To characterize the recent tendencies in fiscal rule design the data of international institutions, e.g. International Monetary Fund and World Bank, as well as the national legislation of the countries applying fiscal rules are used. The research shows the increasing popularity of expenditure growth rules tending to be applied in combination with debt and budget balance rules. The complication of debt rules is also registered. The other notable finding is the expanding use of the rules that incorporate an adjustment for economic cycles, which shows the governments’ endeavor to conduct countercyclical fiscal policy. In addition, the rules has become more flexible due to the introduction of escape clauses and autocorrection mechanisms. Finally, the control over compliance with the prescribed limits has become more stringent.

Suggested Citation

  • Samvel S. Lazaryan & Ivan V. Nikonov & Anton I. Votinov & Ekaterina A. Gubkova, 2019. "International Practice of Fiscal Rules: Formation of Modern Approaches," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 2, pages 65-80, April.
  • Handle: RePEc:fru:finjrn:190205:p:65-80
    DOI: 10.31107/2075-1990-2019-2-65-80
    as

    Download full text from publisher

    File URL: http://www.finjournal-nifi.ru/images/FILES/Journal/Archive/2019/2/statii/fm_2019_2_05.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.31107/2075-1990-2019-2-65-80?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Barbone, Luca & Islam, Roumeen & Sanchez, Luis Alvaro, 2010. "The great crisis and fiscal institutions in eastern and central Europe and central Asia," Policy Research Working Paper Series 5453, The World Bank.
    2. Badinger, Harald & Reuter, Wolf Heinrich, 2017. "The case for fiscal rules," Economic Modelling, Elsevier, vol. 60(C), pages 334-343.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kirill L. Astapov & Rasul А. Musaev & Anton A. Malakhov, 2020. "Evaluating the Effectiveness of the Budget Expenditure Policy," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 6, pages 9-24, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Johannes Blum & Klaus Gründler & Raphael de Britto Schiller & Niklas Potrafke, 2019. "Die Schuldenbremse in der Diskussion – Teilnehmer des Ökonomenpanels mehrheitlich für Beibehaltung," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 72(22), pages 27-33, November.
    2. Afonso, António & Huart, Florence & Tovar Jalles, João & Stanek, Piotr, 2022. "Twin deficits revisited: A role for fiscal institutions?," Journal of International Money and Finance, Elsevier, vol. 121(C).
    3. Aurel IANCU & Dan Constantin OLTEANU, 2022. "Procyclical and Countercyclical Fiscal Policies in Non-Euro EU Member Countries," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 188-205, October.
    4. Grzegorz Poniatowski, 2019. "Enhancing Prudent Fiscal Policy," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 11(4), pages 199-215, December.
    5. Ablam Estel APETI & Bao-We-Wal BAMBE & Jean Louis COMBES, 2022. "On the Macroeconomic Effects of Fiscal Reforms : Fiscal Rules and Public Expenditure Efficiency," LEO Working Papers / DR LEO 2985, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    6. Ryota Nakatani, 2021. "Fiscal Rules for Natural Disaster- and Climate Change-Prone Small States," Sustainability, MDPI, vol. 13(6), pages 1-26, March.
    7. Combes, Jean-Louis & Minea, Alexandru & Sow, Moussé, 2017. "Is fiscal policy always counter- (pro-) cyclical? The role of public debt and fiscal rules," Economic Modelling, Elsevier, vol. 65(C), pages 138-146.
    8. Lizzeri, Alessandro & Bouton, Laurent & Persico, Nicola, 2016. "The Political Economy of Debt and Entitlements," CEPR Discussion Papers 11459, C.E.P.R. Discussion Papers.
    9. Larch, Martin & Orseau, Eloïse & van der Wielen, Wouter, 2021. "Do EU fiscal rules support or hinder counter-cyclical fiscal policy?," Journal of International Money and Finance, Elsevier, vol. 112(C).
    10. López-Herrera, Carmen & Cordero, José M. & Pedraja-Chaparro, Francisco & Polo, Cristina, 2023. "Fiscal rules and their influence on public sector efficiency," MPRA Paper 119018, University Library of Munich, Germany.
    11. Manuel Trajtenberg & Itamar Popliker, 2022. "Toward A Balanced Fiscal Policy for Israel in the Post-COVID Era," Israel Economic Review, Bank of Israel, vol. 20(1), pages 95-137.
    12. Amélie Barbier-Gauchard & Kea Baret & Alexandru Minea, 2021. "National fiscal rules and fiscal discipline in the European Union," Applied Economics, Taylor & Francis Journals, vol. 53(20), pages 2337-2359, April.
    13. Beetsma, Roel & Debrun, Xavier & Fang, Xiangming & Kim, Young & Lledó, Victor & Mbaye, Samba & Zhang, Xiaoxiao, 2019. "Independent fiscal councils: Recent trends and performance," European Journal of Political Economy, Elsevier, vol. 57(C), pages 53-69.
    14. Cezara Vinturis, 2019. "A multi-speed fiscal Europe? Fiscal Rules and Fiscal Performance in the EU Former Communist Countries," Working Papers hal-03097483, HAL.
    15. Maddah, Majid & Ghaffari Nejad, Amir Hossein & Sargolzaei, Mostafa, 2022. "Natural resources, political competition, and economic growth: An empirical evidence from dynamic panel threshold kink analysis in Iranian provinces," Resources Policy, Elsevier, vol. 78(C).
    16. Clemens Fuest & Klaus Gründler & Niklas Potrafke & Marcel Fratzscher & Alexander Kriwoluzky & Claus Michelsen & Michael Hüther & Peter Bofinger & Lars P. Feld & Wolf Heinrich Reuter, 2019. "Schuldenbremse — Investitionshemmnis oder Vorbild für Europa? [Debt Brake — Investment Barrier or Role Model for Europe?]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 99(5), pages 307-329, May.
    17. Jean-Louis Combes & Alexandru Minea & Cezara Vinturis & Pegdéwendé Nestor Sawadogo, 2019. "Can fiscal rules curb income inequality? Evidence from developing countries," CERDI Working papers halshs-02423126, HAL.
    18. Francesca Caselli & Mr. Philippe Wingender, 2018. "Bunching at 3 Percent: The Maastricht Fiscal Criterion and Government Deficits," IMF Working Papers 2018/182, International Monetary Fund.
    19. U. Michael Bergman & Michael Hutchison, 2020. "Fiscal procyclicality in emerging markets: The role of institutions and economic conditions," International Finance, Wiley Blackwell, vol. 23(2), pages 196-214, August.
    20. Sawadogo, Pegdéwendé Nestor, 2020. "Can fiscal rules improve financial market access for developing countries?," Journal of Macroeconomics, Elsevier, vol. 65(C).

    More about this item

    Keywords

    fiscal rules; fiscal policy; government finance; government debt sustainability; economic cycles; countercyclical policy; policy effects;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F01 - International Economics - - General - - - Global Outlook
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fru:finjrn:190205:p:65-80. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gennady Ageev (email available below). General contact details of provider: https://edirc.repec.org/data/frigvru.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.