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Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
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Fiscal Consolidation Across Government Levels - Part 2. Fiscal Rules for Sub-central Governments, Update of the Institutional Indicator
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- Kaja Fredriksen1
- Author Affiliations
- 1: OECD, France
- 28 June 2013
- Bibliographic information
Fiscal rules that constrain sub-central government (SCG) budgeting are very common across the OECD, but there are substantial cross-country differences in their implementation and impact. This paper presents the 2011 update of the fiscal rules database established in 2005. As in 2005, budget balance objectives are the most common form of rule along with borrowing constraints, while limits on SCG expenditure are rare. Because of trade-offs between objectives that fiscal rules must cater to, cross-country variation in the value of the composite indicator is low. There is, however, much more variation in country scores for the individual objectives of fiscal rules. Despite the increased focus on sustainability in public finances over recent years, indicator values have changed little since 2005 except for a few countries. This suggests that the sub-central fiscal rules framework was in place well before the recent crisis struck.
- fiscal rules, fiscal federalism, budget systems
- JEL Classification:
- H11: Public Economics / Structure and Scope of Government / Structure, Scope, and Performance of Government
- H61: Public Economics / National Budget, Deficit, and Debt / Budget ; Budget Systems
- H74: Public Economics / State and Local Government ; Intergovernmental Relations / State and Local Borrowing
- H77: Public Economics / State and Local Government ; Intergovernmental Relations / Intergovernmental Relations ; Federalism ; Secession