Quotation Badinger, Harald, Wolf Heinrich, Reuter. 2017. The case for fiscal rules. Economic Modelling, 60, 334-343.




This paper estimates the effects of fiscal institutions on fiscal policy outcomes, addressing issues related to measurement and endogeneity in a novel way. Recently developed indices, based on partially ordered set theory, are used to quantify the stringency of fiscal rules. Identification of their effects is achieved by exploiting the exogeneity of institutional variables (checks and balances, government fragmentation, inflation targeting), which are found to be relevant determinants of fiscal rules. Our two-stage least squares estimates for (up to) 74 countries over the period 1985–2012 provide strong evidence that countries with more stringent fiscal rules have higher fiscal balances (lower deficits), lower interest rate spreads on government bonds, and lower output volatility.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Economic Modelling
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new VW-D
Language English
Title The case for fiscal rules
Volume 60
Year 2017
Page from 334
Page to 343
Reviewed? Y
DOI http://dx.doi.org/10.1016/j.econmod.2016.09.028
Open Access N
JEL E62; H30; H60


Badinger, Harald (Details)
Wolf Heinrich, Reuter (Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, Germany)
Department of Economics (Badinger) (Details)
Research Institute for European Affairs FI (Details)
Research areas (ÖSTAT Classification 'Statistik Austria')
5115 European integration (Details)
5323 Econometrics (Details)
5335 Political economic theory (Details)
5344 Foreign trade (Details)
5371 Macroeconomics (Details)
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