26 Mar 2012
Fiscal rules and regime-dependent fiscal reaction functions This article argues the case for a policy of "anchored flexibility" in the form of a flexible fiscal rule that allows for the pursuit of economic stability but always anchors that pursuit in fiscal sustainability. The rule is explicitly structured to be simple and is designed in analogy to the inflation-targeting framework. The article heeds the warning that consistently forecasting the output gap with any degree of precision is quite difficult, if not impossible, and thus proposes a target band for the deficit, instead of point targets for the overall deficit and the structural budget balance. To ensure fiscal sustainability over and above the contribution of the deficit rule, the article also proposes a band for the debt/GDP ratio. This debt rule acts as a negative feedback rule that stipulates the adjustments required in the deficit, should the actual debt/GDP ratio move outside the stipulated band. Since the government needs to change revenue and expenditure in order to change the deficit, the article then explores empirically whether and with how much revenue and expenditure in South Africa changed to maintain fiscal sustainability. More specifically the article explores various models of the fiscal reaction function to illuminate government behaviour in South Africa. These models consider how the deficit, expenditure and different types of revenue reacted to the debt/GDP ratio and the output gap to ensure fiscal sustainability. Lastly, the article considers measures that could enhance the automatic stabilisers, while simultaneously allowing for the maintenance of fiscal sustainability in the medium term.
Volume 12
Issue 1
26 Mar 2012
Budgeting in Montenegro This article examines the budget process in Montenegro. After discussing some general legal, political and economic characteristics of the country, recent institutional reforms are surveyed. The section on the budget formulation process pays special attention to the budget structure and classification, the annual budget preparation cycle, medium-term planning, long-term fiscal sustainability, the organisation of the Ministry of Finance, and the funding of local government. Section 3 addresses the parliamentary approval process, including the role of the budget committee, the annual parliamentary budget cycle, and the impact of Parliament. Section 4 focuses on budget execution, in particular the organisation of the executive process, cash management, and reallocation. Section 5 looks at the supply side of the budget process – public administration and service delivery by the central government as well as by local governments – and at public procurement, public employment, the civil service, and the public enterprise sector. Section 6 examines accounting and audit, including financial reporting, internal audit and external audit.
Volume 12
Issue 1
26 Mar 2012
Public-private partnerships in Canadian health care In recent years, the cost of delivering health care in developed and developing countries has been rising exponentially. Governments around the world are searching for alternative mechanisms to reduce costs while increasing the capacity of social programmes with significant investments in infrastructure. A number of jurisdictions have begun to utilise public-private partnerships (PPPs) as a means of achieving these objectives. The use of PPPs in the Canadian health system is a relatively new phenomenon. Generally, the success of PPP projects is evaluated on the basis of the qualitative outcomes of the project, most commonly in a value-for-money analysis.
Volume 12
Issue 1
26 Mar 2012
The Dutch fiscal consolidation package in a comparative perspective The pace of recovery from the financial crisis is uneven across the OECD area. This article discusses the current economic situation in OECD countries and gives an overview of the consolidation efforts currently undertaken by many governments, including the Netherlands. After exploring why fiscal deficits arise and which factors are conducive to successful consolidation, the article concludes with some normative remarks on the Dutch consolidation package in the light of considerations of political economy.
Volume 12
Issue 1
24 Oct 2011
The Performance Framework of the Australian Government, 1987 to 2011 This article analyses the performance frameworks adopted by successive Australian governments since 1987. One highlight was a formal evaluation strategy managed by the Department of Finance to support high-quality policy advice and budget decision making. The replacement of this strategy by a decentralised system of performance indicators is also discussed, together with the quality of government decision making. Lessons for other countries are also highlighted.
Volume 11
Issue 3
24 Oct 2011
The Fiscal Stimulus Programme and Public Governance Issues in China China introduced the largest stimulus package in the world in late 2008, in the wake of the global financial crisis. China was also the first major economy in the world to emerge from the crisis. After a brief though sharp downturn in 2008, the Chinese economy recovered and grew by 8.7% in 2009 and by 10.4% in 2010. This article discusses the fiscal stimulus measures adopted in China in terms of their substantive composition, as well as the decision-making processes and implementation mechanisms. It also discusses some of the challenges encountered.
Volume 11
Issue 3
24 Oct 2011
Independent Fiscal Institutions: Developing Good Practices This article presents an overview of independent fiscal institutions in OECD member countries, outlining their principal common features as well as country-specific attributes and functions, and flags the challenges they face in the surveillance of public finances. The case of the short-lived Fiscal Council in Hungary is discussed, with a comparison to the recently established Office for Budget Responsibility in the United Kingdom. The article draws upon the experience accumulated so far to propose internationally accepted good practices in this area. JEL classification: H610, H680 Keywords: surveillance of public finances, independent fiscal institutions, fiscal council, parliamentary budget office, office for budget responsibility, oversight of fiscal policy, Hungary, United Kingdom
Volume 11
Issue 3
