Do fiscal rules need budget transparency to be effective?

Bram Gootjes*, Jakob de Haan

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

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Abstract

We examine whether fiscal rules’ impact on fiscal performance depends on budget transparency. Using panel data of 73 countries over the 2003–2013 period, we find that fiscal rules do not improve the government budget balance in case of low budget transparency. Furthermore, our results suggest that fiscal rules make (the success of) fiscal adjustments more likely but only when transparency is sufficiently high. These findings appear remarkably robust against including contextualizing factors that may influence the impact of fiscal rules and budget transparency. However, to detect fiscal rules' effect on fiscal adjustments, taking fiscal policy volatility into account is important.

Original languageEnglish
Article number102210
JournalEuropean Journal of Political Economy
DOIs
Publication statusE-pub ahead of print - 21-Mar-2022

Keywords

  • Budget transparency
  • Fiscal adjustments
  • Fiscal consolidation
  • Fiscal policy
  • Fiscal rules

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