IDEAS home Printed from https://ideas.repec.org/p/wbk/wboper/34217.html
   My bibliography  Save this paper

Fiscal Rules in Times of Crisis

Author

Listed:
  • Mahama Samir Bandaogo

Abstract

As governments around the world struggle to piece together the most effective fiscal response to counter the economic and social impact of the COVID-19 outbreak, some are facing constraints imposed by fiscal rules enacted in the past to ensure fiscal discipline. The outbreak has revealedthe weaknesses and inappropriateness of many existing fiscal rules, and authorities should take the opportunity to strengthen their fiscal rules by adopting features that make them more flexible, operational, and enforceable. Research shows that the de facto strength and credibility of the fiscal rule is what matters for fiscal discipline, not the mere de jure existence of one. As important as it is that fiscal rules include contingencies to accommodate large and effective fiscal responses to severe and unprecedented crises, it is also as important that fiscal rules provide clear guidance for building up savings in times of positive shocks.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Mahama Samir Bandaogo, 2020. "Fiscal Rules in Times of Crisis," World Bank Publications - Reports 34217, The World Bank Group.
    • Handle: RePEc:wbk:wboper:34217
    as

    Download full text from publisher

    File URL: https://openknowledge.worldbank.org/bitstream/handle/10986/34217/Fiscal-Rules-in-Times-of-Crisis.pdf?sequence=4
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Antonio Fatás & Ilian Mihov, 2010. "The Euro and Fiscal Policy," NBER Chapters, in: Europe and the Euro, pages 287-324, National Bureau of Economic Research, Inc.
    2. Heinemann, Friedrich & Moessinger, Marc-Daniel & Yeter, Mustafa, 2018. "Do fiscal rules constrain fiscal policy? A meta-regression-analysis," European Journal of Political Economy, Elsevier, vol. 51(C), pages 69-92.
    3. Mrs. Nina Budina & Ms. Andrea Schaechter & Miss Anke Weber & Mr. Tidiane Kinda, 2012. "Fiscal Rules in Response to the Crisis: Toward the "Next-Generation" Rules: A New Dataset," IMF Working Papers 2012/187, International Monetary Fund.
    4. Jaejoon Woo & Manmohan S. Kumar, 2015. "Public Debt and Growth," Economica, London School of Economics and Political Science, vol. 82(328), pages 705-739, October.
    5. Mr. Andrea Pescatori & Mr. Damiano Sandri & John Simon, 2014. "Debt and Growth: Is There a Magic Threshold?," IMF Working Papers 2014/034, International Monetary Fund.
    6. Carmen M. Reinhart & Kenneth S. Rogoff, 2010. "Growth in a Time of Debt," American Economic Review, American Economic Association, vol. 100(2), pages 573-578, May.
    7. World Bank, 2013. "World Development Report 2014 [Informe sobre el desarrollo mundial 2014, Riesgo y oportunidad : la administración del riesgo como instrumento de desarrollo - Panorama general]," World Bank Publications - Books, The World Bank Group, number 16092.
    8. Tapsoba, René, 2012. "Do National Numerical Fiscal Rules really shape fiscal behaviours in developing countries? A treatment effect evaluation," Economic Modelling, Elsevier, vol. 29(4), pages 1356-1369.
    9. Luc Eyraud & Xavier Debrun & Andrew Hodge & Victor Duarte Lledo & Catherine A Pattillo, 2018. "Second-Generation Fiscal Rules; Balancing Simplicity, Flexibility, and Enforceability," IMF Staff Discussion Notes 18/04, International Monetary Fund.
    10. Ilzetzki, Ethan & Mendoza, Enrique G. & Végh, Carlos A., 2013. "How big (small?) are fiscal multipliers?," Journal of Monetary Economics, Elsevier, vol. 60(2), pages 239-254.
    11. Aart Kraay, 2012. "How large is the Government Spending Multiplier? Evidence from World Bank Lending," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(2), pages 829-887.
    12. Loayza,Norman V. & Pennings,Steven Michael, 2020. "Macroeconomic Policy in the Time of COVID-19 : A Primer for Developing Countries," Research and Policy Briefs 147291, The World Bank.
    13. Caselli, Francesca & Reynaud, Julien, 2020. "Do fiscal rules cause better fiscal balances? A new instrumental variable strategy," European Journal of Political Economy, Elsevier, vol. 63(C).
    14. Norman V. Loayza & Steven Pennings, 2020. "Macroeconomic Policy in the Time of COVID-19," World Bank Publications - Reports 33540, The World Bank Group.
    15. Mr. Luc Eyraud & Mr. Xavier Debrun & Andrew Hodge & Victor Duarte Lledo & Ms. Catherine A Pattillo, 2018. "Second-Generation Fiscal Rules: Balancing Simplicity, Flexibility, and Enforceability," IMF Staff Discussion Notes 2018/004, International Monetary Fund.
    16. Bergman, U. Michael & Hutchison, Michael M. & Jensen, Svend E. Hougaard, 2016. "Promoting sustainable public finances in the European Union: The role of fiscal rules and government efficiency," European Journal of Political Economy, Elsevier, vol. 44(C), pages 1-19.
    17. Allen Schick, 2010. "Post-Crisis Fiscal Rules: Stabilising Public Finance while Responding to Economic Aftershocks," OECD Journal on Budgeting, OECD Publishing, vol. 10(2), pages 1-18.
    Full references (including those not matched with items on IDEAS)

    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. Panizza, Ugo & Fatás, Antonio & Ghosh, Atish R. & ,, 2019. "The Motives to Borrow," CEPR Discussion Papers 13735, C.E.P.R. Discussion Papers.
    2. Cezara Vinturis, 2019. "A multi-speed fiscal Europe? Fiscal Rules and Fiscal Performance in the EU Former Communist Countries," Working Papers hal-03097483, HAL.
    3. 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).
    4. 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.
    5. 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.
    6. Sawadogo, Pegdéwendé Nestor, 2020. "Can fiscal rules improve financial market access for developing countries?," Journal of Macroeconomics, Elsevier, vol. 65(C).
    7. Cezara Vinturis, 2023. "How do fiscal rules shape governments' spending behavior?," Economic Inquiry, Western Economic Association International, vol. 61(2), pages 322-341, April.
    8. Ardanaz, Martín & Cavallo, Eduardo & Izquierdo, Alejandro & Puig, Jorge, 2021. "Growth-friendly fiscal rules? Safeguarding public investment from budget cuts through fiscal rule design," Journal of International Money and Finance, Elsevier, vol. 111(C).
    9. Andrian, Leandro Gaston & Valencia, Oscar & Hirs, Jorge & Urrea Rios, Ivan Leonardo, 2022. "Fiscal Rules and Economic Cycles: Quality (Always) Matters," IDB Publications (Working Papers) 12639, Inter-American Development Bank.
    10. Brändle, Thomas & Elsener, Marc, 2023. "Do fiscal rules matter? A survey on recent evidence," Working papers 2023/07, Faculty of Business and Economics - University of Basel.
    11. Mihaela Onofrei & Tudorel Toader & Anca Florentina Vatamanu & Florin Oprea, 2021. "Impact of Governments’ Fiscal Behaviors on Public Finance Sustainability: A Comparative Study," Sustainability, MDPI, vol. 13(7), pages 1-16, March.
    12. Amelie BARBIER-GAUCHARD & Kea BARET & Alexandru MINEA, 2019. "National Fiscal Rules Adoption and Fiscal Discipline in the European Union," Working Papers of BETA 2019-40, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    13. Reuter, Wolf Heinrich, 2019. "When and why do countries break their national fiscal rules?," European Journal of Political Economy, Elsevier, vol. 57(C), pages 125-141.
    14. Ryota Nakatani, 2021. "Fiscal Rules for Natural Disaster- and Climate Change-Prone Small States," Sustainability, MDPI, vol. 13(6), pages 1-26, March.
    15. 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.
    16. 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).
    17. Levieuge, Grégory & Lucotte, Yannick & Pradines-Jobet, Florian, 2021. "The cost of banking crises: Does the policy framework matter?," Journal of International Money and Finance, Elsevier, vol. 110(C).
    18. 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.
    19. Luc Eyraud & Xavier Debrun & Andrew Hodge & Victor Duarte Lledo & Catherine A Pattillo, 2018. "Second-Generation Fiscal Rules; Balancing Simplicity, Flexibility, and Enforceability," IMF Staff Discussion Notes 18/04, International Monetary Fund.
    20. Kea BARET, 2021. "Fiscal rules’ compliance and Social Welfare," Working Papers of BETA 2021-38, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.

    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:wbk:wboper:34217. 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: Tal Ayalon (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.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.