OECD Economics Department Working Papers

ISSN :
1815-1973 (online)
DOI :
10.1787/18151973
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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.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

 

Fiscal Gimmickry in Europe

One-Off Measures and Creative Accounting You or your institution have access to this content

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Author(s):
Vincent Koen1, Paul van den Noord
Author Affiliations
  • 1: OECD, France

Publication Date
10 Feb 2005
Bibliographic information
No.:
417
Pages
37
DOI
10.1787/237714513517

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Accounting conventions usually leave some room for judgment, which governments may be tempted to take advantage of, especially when fiscal rules bite or threaten to do so. The European experience over the past decade -- documented here in great detail -- illustrates that fiscal gimmicks come in many different guises, but also that some are less mischievous than others. Logit regression analysis confirms that when deficit rules or, to a lesser extent, debt thresholds tend to become more binding, recourse to gimmicks is more likely. It also suggests that more centralised budget systems are less prone to such gimmickry. The policy implications are clear as regards the virtues of transparent and consistent accounting practices, but more ambiguous regarding the merits or otherwise of one-off measures ...

Keywords:
political economy, fiscal gimmicks, fiscal deficit, public debt, national accounts, fiscal rules, Economic and Monetary Union, stability and growth pact, budgets
JEL Classification:
  • D78: Microeconomics / Analysis of Collective Decision-Making / Positive Analysis of Policy-Making and Implementation
  • E61: Macroeconomics and Monetary Economics / Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook / Policy Objectives; Policy Designs and Consistency; Policy Coordination
  • H27: Public Economics / Taxation, Subsidies, and Revenue / Other Sources of Revenue
  • H6: Public Economics / National Budget, Deficit, and Debt
  • H74: Public Economics / State and Local Government; Intergovernmental Relations / State and Local Borrowing
  • H81: Public Economics / Miscellaneous Issues / Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
  • H82: Public Economics / Miscellaneous Issues / Governmental Property
  • H87: Public Economics / Miscellaneous Issues / International Fiscal Issues; International Public Goods