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Dynamic Effects of Fiscal Rules: Do Initial Conditions Matter?

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dc.contributor.authorFatás, Antonio
dc.contributor.authorGootjes, Bram
dc.contributor.authorMawejje, Joseph
dc.date.accessioned2025-02-19T19:33:22Z
dc.date.available2025-02-19T19:33:22Z
dc.date.issued2025-02-19
dc.description.abstractFiscal rules have been shown to support fiscal discipline by improving government budget balances and restraining the growth of debt. However, questions remain about what enhances their effectiveness and how certain conditions help to build the credibility needed for their survival and success. Using data from 108 countries between 1984 and 2012, this paper studies the dynamic effects of fiscal rule adoption. It shows that although fiscal rules generally improve the primary balance, their effects depend on the time horizon under consideration and the context of adoption. In advanced economies and countries with strong political institutions, the effects strengthen over time. Conversely, in emerging markets and developing economies—especially those with weaker institutions—their impact tends to fade as time passes. The findings highlight the critical role of economic conditions and consensus building at the time of adoption. Specifically, fiscal rules introduced in times of economic hardship or under highly concentrated political power are often less effective in the medium term.en
dc.identifierhttp://documents.worldbank.org/curated/en/099510402182533319/IDU118387c9715d831425219e6f155a175dadee5
dc.identifier.doi10.1596/1813-9450-11066
dc.identifier.doihttps://doi.org/10.1596/1813-9450-11066
dc.identifier.urihttps://hdl.handle.net/10986/42836
dc.languageEnglish
dc.language.isoen_US
dc.publisherWashington, DC: World Bank
dc.relation.ispartofseriesPolicy Research Working Paper; 11066
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttps://creativecommons.org/licenses/by/3.0/igo/
dc.subjectFISCAL POLICY
dc.subjectFISCAL RULES
dc.subjectINITIAL CONDITIONS
dc.subjectSTATE DEPENDENCE
dc.subjectINSTITUTIONS
dc.subjectLOCAL PROJECTIONS
dc.titleDynamic Effects of Fiscal Rulesen
dc.title.subtitleDo Initial Conditions Matter?en
dc.typeWorking Paper
dspace.entity.typePublication
okr.date.disclosure2025-02-19
okr.date.doiregistration2025-04-14T12:00:28.283385Z
okr.date.lastmodified2025-02-18T00:00:00Zen
okr.doctypePolicy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/099510402182533319/IDU118387c9715d831425219e6f155a175dadee5
okr.guid099510402182533319
okr.identifier.docmidIDU-18387c97-5d83-4252-9e6f-55a175dadee5
okr.identifier.doi10.1596/1813-9450-11066
okr.identifier.externaldocumentum34457470
okr.identifier.internaldocumentum34457470
okr.identifier.reportWPS11066
okr.import.id6641
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/099510402182533319/pdf/IDU118387c9715d831425219e6f155a175dadee5.pdfen
okr.region.geographicalWorld
okr.sectorFY17 - Other Public Administration
okr.themeMacroeconomic & Structural Policy Modelling,Economic Policy,Economic Growth and Planning
okr.topicMacroeconomics and Economic Growth::Fiscal & Monetary Policy
okr.topicMacroeconomics and Economic Growth::Economic Growth
okr.unitProspects Group (DECPG)
relation.isAuthorOfPublication62b4b245-a963-4958-b4d7-9f962d5dd629
relation.isAuthorOfPublication.latestForDiscovery62b4b245-a963-4958-b4d7-9f962d5dd629
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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