On Promoting Fiscal Discipline : The Role of Exchange Rate Regimes, Fiscal Rules and Institutions

This paper examines how fiscal rules, exchange rate regimes, and institutional quality affect the cyclical behavior of fiscal policy (how government spending responds to fluctuations in gross domestic product). The analysis is performed on a panel...

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Main Authors:	Keita, Kady, Turcu, Camelia
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2019
Subjects:	EXCHANGE RATE REGIME FISCAL POLICY FISCAL DISCIPLINE INSTITUTIONS BUSINESS CYCLE CYCLICALITY PROCYCLICAL POLICY GOVERNANCE
Online Access:	http://documents.worldbank.org/curated/en/963111565102845593/On-Promoting-Fiscal-Discipline-The-Role-of-Exchange-Rate-Regimes-Fiscal-Rules-and-Institutions http://hdl.handle.net/10986/32216

id	okr-10986-32216
recordtype	oai_dc
spelling	okr-10986-322162022-08-01T00:25:22Z On Promoting Fiscal Discipline : The Role of Exchange Rate Regimes, Fiscal Rules and Institutions Keita, Kady Turcu, Camelia EXCHANGE RATE REGIME FISCAL POLICY FISCAL DISCIPLINE INSTITUTIONS BUSINESS CYCLE CYCLICALITY PROCYCLICAL POLICY GOVERNANCE This paper examines how fiscal rules, exchange rate regimes, and institutional quality affect the cyclical behavior of fiscal policy (how government spending responds to fluctuations in gross domestic product). The analysis is performed on a panel of 153 advanced, emerging, and developing countries over 1993-2015 using local Gaussian-weighted ordinary least squares and two-stage least squares estimators. The findings show that the adoption of fiscal rules alone is not sufficient to promote countercyclical fiscal policy and should be combined with strong institutions. Moreover, fiscal rules seem to limit procyclicality, especially in countries with flexible exchange rate regimes rather than in countries with fixed exchange rates. The analysis also finds that the disciplining effect of fiscal rules depends on the type of rule. 2019-08-07T21:41:10Z 2019-08-07T21:41:10Z 2019-08 Working Paper http://documents.worldbank.org/curated/en/963111565102845593/On-Promoting-Fiscal-Discipline-The-Role-of-Exchange-Rate-Regimes-Fiscal-Rules-and-Institutions http://hdl.handle.net/10986/32216 English Policy Research Working Paper;No. 8964 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	EXCHANGE RATE REGIME FISCAL POLICY FISCAL DISCIPLINE INSTITUTIONS BUSINESS CYCLE CYCLICALITY PROCYCLICAL POLICY GOVERNANCE
spellingShingle	EXCHANGE RATE REGIME FISCAL POLICY FISCAL DISCIPLINE INSTITUTIONS BUSINESS CYCLE CYCLICALITY PROCYCLICAL POLICY GOVERNANCE Keita, Kady Turcu, Camelia On Promoting Fiscal Discipline : The Role of Exchange Rate Regimes, Fiscal Rules and Institutions
relation	Policy Research Working Paper;No. 8964
description	This paper examines how fiscal rules, exchange rate regimes, and institutional quality affect the cyclical behavior of fiscal policy (how government spending responds to fluctuations in gross domestic product). The analysis is performed on a panel of 153 advanced, emerging, and developing countries over 1993-2015 using local Gaussian-weighted ordinary least squares and two-stage least squares estimators. The findings show that the adoption of fiscal rules alone is not sufficient to promote countercyclical fiscal policy and should be combined with strong institutions. Moreover, fiscal rules seem to limit procyclicality, especially in countries with flexible exchange rate regimes rather than in countries with fixed exchange rates. The analysis also finds that the disciplining effect of fiscal rules depends on the type of rule.
format	Working Paper
author	Keita, Kady Turcu, Camelia
author_facet	Keita, Kady Turcu, Camelia
author_sort	Keita, Kady
title	On Promoting Fiscal Discipline : The Role of Exchange Rate Regimes, Fiscal Rules and Institutions
title_short	On Promoting Fiscal Discipline : The Role of Exchange Rate Regimes, Fiscal Rules and Institutions
title_full	On Promoting Fiscal Discipline : The Role of Exchange Rate Regimes, Fiscal Rules and Institutions
title_fullStr	On Promoting Fiscal Discipline : The Role of Exchange Rate Regimes, Fiscal Rules and Institutions
title_full_unstemmed	On Promoting Fiscal Discipline : The Role of Exchange Rate Regimes, Fiscal Rules and Institutions
title_sort	on promoting fiscal discipline : the role of exchange rate regimes, fiscal rules and institutions
publisher	World Bank, Washington, DC
publishDate	2019
url	http://documents.worldbank.org/curated/en/963111565102845593/On-Promoting-Fiscal-Discipline-The-Role-of-Exchange-Rate-Regimes-Fiscal-Rules-and-Institutions http://hdl.handle.net/10986/32216
_version_	1764476052297482240

On Promoting Fiscal Discipline : The Role of Exchange Rate Regimes, Fiscal Rules and Institutions

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